Consumer stress has risen for the fifth straight quarter, but concerns over cost of living are beginning to decrease as inflation eases, a new report has revealed.
The NAB Consumer Stress Index for the fourth quarter of 2023 found stress is at the highest rate since the beginning of 2020 and is above the survey average for the first time in almost four years.
The cost of living remains the largest concern for consumers, but stress levels remained unchanged in the December quarter, after easing for the first time in nearly two years in the previous period.
Instead, anxieties over job security are becoming a rising concern, sharply climbing nearly two per cent last quarter.
NAB said it expects consumer concerns around job security to continue to rise, with unemployment tipped to reach 4.5 per cent by the end of the year.
Consumers were also increasingly worried about their ability to fund their retirement – with stress levels at their highest since the onset of the COVID-19 pandemic.
When it came to specific trends, the report found Victorians and South Australians were the most stressed consumers, with both states also reporting a significant spike in job security stress.
West Australian consumers were the most relaxed when it came to the economy, while Tasmania was the only state to record lower stress.
Furthermore, women reported higher stress levels than men in all areas, especially retirement funding and cost of living.
Consumers in 30-49 age bracket recorded the highest stress, with apartment renters and parents of children under 18 more likely to be crippled by stress.
Over-65s were the least stressed age group.
Across the board, about 80 per cent of consumers believed prices further increased in the December quarter, particularly the price of groceries, utilities, transport, eating out and mortgages.
Consumers across the income spectrum are “rapidly changing” their spending habits in response to rising consumer stress, the report found.
One in two cut back on eating out, buying coffee and snacks, entertainment and car travel in the last quarter of the year, while one in three cancelled or cut back on subscriptions to streaming services.
Four in 10 cut back on charitable giving to curb spending – which experts have coined as “consumption smoothing”.
Private school fees and tutors, children’s activities like sports and spending on their pets were least likely to be impacted by cutbacks.
Consumers are also decreasingly loyal when shopping and were less likely to consider supporting local businesses and buying Australian-made products.
