Surf, Shop, Save 2.0: How online retail is helping ease cost-of-living pressures in Australia

Cost-of-living pressures are deepening

Inflation hit 4.6 per cent in the year to March 2026. Supply-side factors have driven more than half of headline inflation since 2024, with traditional monetary policy being less effective against supply shocks. Competition and productivity are the more powerful levers, and online channels are helping to provide both.

Online prices have fallen since 2019, in an otherwise inflationary environment

The Online Channel Index has deflated 6 percentage points since 2019, while the comparable CPI basket has risen 8 percentage points.

Online channels save the average household $1,414 in 2026

Mandala modelled what inflation would look like without the growth of online channels. The results show three direct benefits for households:

• Annual inflation would have been 0.8 percentage points higher in the year to March 2026.
• Up to $4,000 a year in saved interest on the average owner-occupier mortgage, through lower flow-on rates.
• $1,414 in direct savings for the average household in 2026, or $7,766 cumulatively since 2019.
• Lower-income households gain most. Savings represent 1.2 per cent of gross income for the lowest income quintile, compared to 0.5 per cent for the highest.

A single retail market makes channel-specific regulation misplaced

The benefits flow to businesses as well as consumers. Small and medium businesses using online channels are 45 per cent more productive than those that do not, equivalent to $86,000 more in revenue per worker. Some of the country's largest retailers, Woolworths, Coles, Wesfarmers and JB Hi-Fi, are also leading omnichannel players, indicating that online and offline are a single market rather than two separate markets.

To support the benefits created by online channels, three principles should guide any future regulation:

• Build on existing frameworks. Existing regulation has supported competition without imposing unnecessary costs on industry. Future policy should recognise that consumers move seamlessly between physical and online channels.
• Reform based on evidence. Where governments propose new regulation, it should be based on clear evidence of consumer detriment, with rules targeted at specific harms rather than technologies or channels.
• Reduce regulatory fragmentation. Inconsistencies across state and territory regulation are estimated to cost the Australian economy $26 billion and households $9.4 billion over the next ten years.

Read the full report here.