Below trend growth to continue
Consumer anxiety rises as concerns over the economy grow.
The NAB Consumer Anxiety Index (a measure of consumer concern about their future spending and savings), rose 2.9 points over the September quarter to 57.3 points (but remains below average).
All components of NAB’s Index increased, with worries over health expenses, government policy and the ability to fund retirement, rising most.
That said, concerns over the cost of living continue to be the single biggest driver of overall anxiety (with almost 1 in 4 consumers rating their anxiety over living costs ‘very high’), again highlighting the disconnect between low levels of economy-wide inflation and consumer focused costs.
“When we ask Australian consumers what worries them, the cost of living is consistently at the top of their list”, said NAB Chief Economist Alan Oster.
The official Consumer Price Index (CPI) from the Australian Bureau of Statistics calculates the price of a “basket” of goods and services and includes the price of things like food, alcohol, clothing, housing, health expenses, transport, education and financial services.
“But, some of these costs worry some consumers more than others and these are the costs consumers often think of most when determining their true cost of living”, said Alan.
New NAB research asked consumers to identify which costs are impacting their own living expenses the most.
Around 6 in 10 Australians said utilities (e.g. electricity, gas, water etc.) and groceries added most to their cost of living expenses over the past 3 months. These also had the biggest impact on living costs irrespective of age, income or location.
“But your age and your income did have an impact on other causes of cost of living pressures”, said Mr. Oster.
“For example, more young people aged 18-29 were impacted by rent, eating out, entertainment and other debt than any other age group”, said Alan.
In the 30-49 age group, mortgages and children had a far bigger impact, while utilities added most to cost of living expenses for 50-64 year olds and the over 65s. Groceries were also a far bigger factor in older age groups, as were home improvements.
By income, far more consumers in the lowest earning group were impacted by rents and those in the highest income group by their mortgages. Consumers earning over $75,000 p.a. were also far more likely to have experienced an uplift in cost of living expenses from children (e.g. school fees, childcare, activities, child support etc.) than lower income groups.
Other key findings include:
For further information, please download the NAB Consumer Anxiety Report Q3 2019.
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