A further slowing in growth
Cost of living stress eases after rising for 7 consecutive quarters
The NAB Consumer Stress Index increased for the fourth consecutive quarter as stresses associated with jobs, health, retirement and Government policies all rose. However, cost of living stress, by far the biggest cause of concern, eased after rising for the past seven quarterly surveys. Though consumers are stretched (on balance, 8 in 10 believe living costs increased further in Q3), many are growing more accustomed to these pressures, and are having to make deliberate spending trade-offs in order to manage household balance sheets and support their lifestyle in their own way.
Consumers have been able to adapt because of the availability of jobs. Should employment fall sharply, we could see a significant adjustment in spending. There is a clear expectation that the cost of necessities (groceries, utilities, transport, rent and mortgages), will all continue to rise over the coming year.
To manage, consumers are reprioritising their lives – 1 in 2 are cutting back on eating out, entertainment and car travel. Combined, this represents an annual savings buffer of $3,900 on average, if continued.
4 in 10 consumers have saved on holidays and food delivery and 1 in 3 on a major household appliance and subscription streaming services. Somewhat paradoxically, consumers are splurging and trading down on other purchases. Intent to splurge is especially pronounced among younger age groups.
Almost all households are rebalancing, but spending patterns are nuanced, depending on age groups, income levels and housing status.
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