Growth, inflation and labour market all easing
Consumer stress has fallen despite rising concerns over the cost of living as job pressures ease further
The NAB Consumer Stress Index eased to 55.2 pts in Q3 (56.1 pts in the previous quarter) and remains comfortably below the survey average (58.6 pts). Despite higher consumer stress associated with cost of living (now at its highest point since 2018), this was offset by a further easing in stress related to job security (near 4-year lows). Australian consumers also reported a noticeable decline in stress related to government policy.
While higher inflation is eating into real consumption, higher frequency data suggests the economy has remained resilient, with strength in the NAB Business Survey still evident, while the labour market and consumer spending (including NAB customer transactions) has held up. Growth is however expected to slow from here as higher rates and cost of living pressures see households cut back their spending.
While consumer stress has eased, cost of living pressures are resulting in consumers changing the way they spend with 6 in 10 (61%) switching to cheaper brands or shopping around for cheaper products, and 1 in 2 (54%) cancelling or cutting back on food delivery services and or on entertainment (47%). A growing number have also cancelled or cut back other subscriptions like newspapers, magazines, audio books etc. (36%), subscription streaming services (31%) and gym, sports or club memberships (31%).
For the first time we asked consumers to estimate their average spend for each of these key expenses and how much they think they will be paying in 3 months’ time. Consumers on average estimate they currently spend around $180 per week on groceries, but expected this to climb to $239 in 3 months’ time – an increase of $59 or 33%. For fuel, consumers are currently spending $67 per week, but this figure is expected to climb to $102 in 3 months’ time – an increase of $35 or 52%. For utilities (gas, electricity, water), consumers estimate they are currently spending around $244 per month, with this expected to climb to around $320 in 3 months’ time – an increase of $76 or 31%.
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