There is a warning today that Australian households are nearing the limits of their financial pressure as budgets continue to be stretched.
New research by Finder measuring cost-of-living impacts for November found 79 per cent of households are feeling “extreme” stress, up from 45 per cent three years ago.
And three out of four people are somewhat or extremely stressed with their financial situation.
The data was part of Finder’s “Cost of Living Pressure Gauge”, which combines data from the comparison site and the Reserve Bank of Australia.
The gauge measures the impact of housing stress, salary expectations, household debt, financial stress, household savings, holiday plans, credit card spending, interest rates, property prices and inflation.
Results for November show a dip from May when 85 per cent of households reported feeling under “extreme” financial stress.
But they also reveal how stretched household budgets are in comparison with the same month in 2020 when the economy had low interest rates and inflation.
While today 37 per cent of homeowners and 44 per cent of renters were struggling to pay for a roof over their head, in November 2020 only 18 per cent and 32 per cent reported housing stress.
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Over three years, Australia’s inflation rate has jumped from 0.9 per cent to 5.4 per cent, while interest rates today are 4.35 per cent compared with 0.10 per cent in November 2020.
Graham Cooke, head of consumer research at Finder, said the drain on household budgets made it harder for people to build up their savings for when they needed them in future years.
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“Despite a slight decline from the May 2023 peak of 85 per cent, current levels remain considerably higher than most of 2020 and 2021.
“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.”
Cooke said households looking for ways to trim their budget should identify areas they can cut back without compromising their basic needs.
