Australian households are under “extreme” cost-of-living pressure with two in five people struggling to pay to have a roof over their head, according to a new report.
Finder’s cost-of-living pressure gauge, which measures economic strain based on a number of factors, was at an “extreme” level of 79 per cent at the end of November, the financial comparison website said on Monday.
The reading “is a good indication of how under the pump Aussie households are feeling”, and despite a slight decline from the May 2023 peak of 85 per cent, “current levels remain considerably higher than most of 2020 and 2021”, Graham Cooke, head of consumer research at Finder, said.
“As households look to stretch their budgets further, this affects their ability to create a decent savings buffer to protect themselves from further pressure.
The monthly gauge combines responses from Finder’s consumer sentiment tracker survey with Reserve Bank (RBA) data to provide a “clear depiction of the economic challenges faced by consumers”.
Data from the consumer sentiment tracker, an ongoing survey of more than 53,000 Australians, includes mortgage and rent stress, financial stress, salary expectations, household debt, household savings, holiday plans and credit card dependency.
That is combined with RBA data including the official cash rate, inflation, house prices, savings rate, credit card spending and unpaid card balances, to arrive at an overall figure.
The 79 per cent November number reflects the underlying numbers which suggest that 78 per cent of Australians report feeling extremely or somewhat stressed about their finances, 37 per cent of homeowners and 44 per cent of renters are struggling to pay for the roof over their head, and 64 per cent of mortgage holders cite mortgage stress as a key financial concern.
The annual inflation rate is currently 5.4 per cent and the official cash rate is 4.35 per cent, its highest level since 2011.
By comparison, when Finder’s gauge reported a “moderate” pressure level of 45 per cent in November 2020, only 18 per cent of homeowners and 32 per cent of renters were struggling, and 42 per cent of mortgage holders were concerned about mortgage stress.
At that point, the cash rate was still at its record low of 0.1 per cent.
Mr Cooke said households should look for areas they can cut back without compromising their basic needs.
“Recognise areas of spending that don’t provide significant value and consider cancelling or downgrading,” he said.
“Our gauge’s results show a stark reality — rising costs, housing stress, and the reliance on credit cards for financial management are putting millions under the pump. Whether it’s refinancing or switching energy providers, there are big savings to be had by shopping around and comparing your options.”
It comes after annual data from St Vincent de Paul Society on Friday revealed a 40 per cent rise in calls for assistance or support all over the country in the past year.
Additional research from Gravox revealed 17 per cent of Aussies surveyed said they would be cutting back on Christmas spending, looking at op shops for presents.
“The Christmas period is one of celebrating and joy; however, this isn’t the reality for many Australians,” St Vincent de Paul Society national president Mark Gaetani said.
“Currently, there are 761,000 children whose families lack adequate food and struggle to pay essential household bills.”
More than a quarter of those (27 per cent) who participated in the Gravox research said they were not in “the same financial position” as last year, while 33 per cent said financial pressures were crippling their Christmas budget.
The Catholic charity warned that it had noticed a “concerning trend” among those seeking assistance “in that they are people who we would broadly consider to have security in their quality of living”.
“They are seeing people in full-time employment and households on dual incomes turn to our members for assistance because of financial pressures from essentials that they cannot do without,” a spokesman said.
“People cannot cut back on having a roof over their head, feeding their children or paying for utilities. They are seeing instances where, to be able to cover an increase in rent, families are turning to the society in order to put food on the table.”
Although Australia’s annual inflation rate eased to 5.4 per cent in the year to September, down from a peak of 9.2 per cent in December 2022, the major supermarkets are facing accusations of price-gouging during the cost-of-living crisis.
Fruit and vegetable growers last week accused Coles and Woolworths of hurting consumers and driving farmers out of business by charging too much for fresh produce.
“They say there’s competition — bulls**t,” said Shaun Jackson, 62, owner of melon producer Daintree Fresh in far north Queensland’s Lakeland.
“The truth is a long time ago the ACCC let two companies own our fuel, our food and our [alcohol] and they own total control. The fact their prices are so high is actually the manipulation itself because they’re slowing down buying. If you put pumpkins on special for $1.50 the market would clear and the price would kick — that’s the last thing they want. The prices prove the competition isn’t there. There’s no way they’d make 400 per cent margins on that stuff if there was competition.”
Both companies recorded profits in excess of $1 billion this year, sparking criticism from consumer advocacy group Choice which last month named the duopoly in the Shonky Awards, an annual list that recognises the worst products and services of the year.
Amid the growing criticism, the supermarkets will be ordered to front up to a Senate inquiry examining alleged “price gouging”, expected to be established this week after the Greens secured Labor’s support.
“Coles and Woolworths are making billions in profits by price gouging in a cost-of-living crisis,” Greens economic justice spokesman Senator Nick McKim said over the weekend.
“For too long the big supermarkets have had too much market power. This allows them to dictate prices and terms that are hitting people hard. It’s time to smash the duopoly.”
A Woolworths spokesman said the supermarket is “committed to offering our customers value while working with our suppliers to manage economy-wide inflationary pressures”, adding that “we know Australians are feeling the strain of cost of living and we are working to deliver relief in their weekly grocery shop”.
A Coles spokesperson said the supermarket “[believes] all Australians should be able to put quality food on the table for their families, at a good price” and that having a “profitable business” means it can continue to serve Australians and employ 120,000 staff.
The Senate inquiry will examine the price setting practices between the two major supermarket chains, the large increase in price of essential items, as well as the prevalence of opportunistic pricing and mark-ups, among other issues.
Initial hearings are tipped to take place in early 2024.
— with NCA NewsWire