Growth, inflation and labour market all easing
Consumer stress up again due to cost of living, but job pressures hit a 4-year low. Purchasing expectations fall sharply, particularly for travel.
The NAB Consumer Stress Index increased for the second straight quarter to 56.4 pts in Q2 2022, from 55.7 pts in Q1. Higher stress was again largely associated with rising concern over cost of living, which jumped a further 2.3 pts during the quarter to 67.0 pts – its highest read since Q4 2018. Overall consumer stress remains lower than in the same quarter a year ago (57.8 pts), and is well below the survey average (58.7 pts). While there was an increase in stress associated with government policy (up 1.1 pts over the quarter to 61.1 pts), stress related to job security eased further to a 4-year low 41.4 pts. Consumer stress levels related to retirement funding was unchanged (56.4 pts), while stress related to health was marginally lower (down 0.6 pts to 54.7 pts). The “stress gap” between the lowest (up 1.2 pts to 61.8 pts) and highest (down 0.6 pts to 52.9 pts) income earners widened to 8.9 pts in Q2 after narrowing in the last four quarters. The unemployed or those who lost their main source of income due to COVID (68.2 pts) continue have the highest stress of all groups and by a large margin.
More Australian consumers are noticing price increases across a number of key categories. Grocery prices come in at number one, with a net +72% of consumers noting higher prices over the past 3 months (up from +50% at the same time last year). With travel and work restrictions easing and petrol prices rising, transport costs came in second (+66%) followed by utility costs (+59%). Consumers are not only noticing price increases more but are changing their spending and lifestyle patterns in an attempt to tackle them (see NAB Consumer Insights: Impacts of cost of living pressures on consumer spending and lifestyle behaviours).
Consumer expectations in regard to major household purchases over the next 12 months also fell sharply in Q2 in all spending categories. Despite concerns about inflation and the cost of living, until recently this had not significantly impacted on intentions to spend on some categories, particularly travel. While spending plans on holidays remains slightly positive, it is down sharply from the previous quarter. Significantly more consumers also said they expect to spend less on home renovations and major household items.
NAB Group Executive for Personal Banking, Rachel Slade, acknowledged that there are some individuals who may be feeling the cost-of-living pressures.
“When we look at our customers, as a whole they are in a really good position right now – in fact 70% are ahead on their mortgage payments giving them financial flexibility. We also know though that having job security is critical to relieving household stress – the high rate of employment in Australia right now is doing a lot to put people at ease,” Ms Slade said.
“As a bank we’ve never been in a better position to help. The establishment of our NAB Assist team in 2016 together with some smart analytics means that we are able to quickly identify those customers who may need our help so we can get in touch with them.”
“There are many things we can do to help from discussing flexibility around home loan payments to providing tailored budgeting tools.”
© National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.