The pressure is rising.
Worries across the budget.
And how does Australia fare?
The age-old question.
The Australian Consumer Price Index (CPI) has been growing at its fastest rate in more than 30 years.
The Covid-19 pandemic saw the index drop to an all-time low in June 2020.
But global factors, including supply and labour shortages and the war in Ukraine have seen inflation soar, with almost consistent growth through to 2023.
There were only signs of easing in April, following a series of cash rate hikes from the Reserve Bank.
Housing costs have experienced the brunt of that, with as much as a 10.7% increase year-on-year.
These economic changes were unexpected for many consumers who had spent the years prior contributing to their savings and investing in new homes.
Unemployment has dropped in Australia too with a tight job market an indicator for recent wage growth.
Unsurprisingly, an overwhelming majority of Australians surveyed (94%) felt that cost of living had increased in the last 12 months. This was consistent across almost all demographics.
Internationally, things look a little different. Americans responding that cost of living pressures aren’t as severe as those being felt by Australians:
And as for Canadians:
Everyday expenses including the cost of groceries, energy bills, and fuel prices are the main cause of concern. This was observed across all age groups.
Other pressure points differed between generations.
If we were to compare the different stressors by the most affected age group, here’s what we found:
And on an income basis:
Even though more than half of Australians have credit card debt, only 25% would pay it off if they were given $500. Just over 35% of Australians would put the money into a bank account, while one in five (19%) would put it towards regular weekly expenses. The age group most likely to pay off debt is Gen X (33%), Millennials (26%), Baby Boomers (22%), followed by Generation Z (21%).
Meanwhile, more than 60% of Canadians said they had credit card debt. Millennials were the most likely generation to report this kind of debt (72%), followed by Gen X (62%), Gen Z (58%), and Baby Boomers (54%). The US results reveal a similar pattern: Millennials (60%), Gen X (58%), Gen Z (47%), and then Baby Boomers (46%).
Compare the Market’s General Manager of Money, Stephen Zeller, said there were signs the number of indebted households has been rising.
“Increased cost of living expenses, fuel, gas and energy prices have undoubtedly put strain on the budget belt of many Australian households,” Mr Zeller said.
“In December 2022, the number of arrears was 0.76%, up from 0.65% in November 2022.
“But borrowers aren’t the only ones who are feeling the pressure at the hip pocket.
“Tenants have been slapped with higher rental prices as landlords have attempted to pass on the heat.”
Nearly 50% of adults across Australia, Canada and America said they had not invested money over the past year.
Baby Boomers are the least likely to invest
Regardless of which country you reside in, the findings show that those who have a mortgage are more likely to invest their money than someone who rents.
Where are income brackets most likely to invest?
Shares, Index funds, ETFs, Bonds and Managed Funds were the most popular investment options across income brackets. People on larger incomes were the most likely to invest in shares.
“The value of property has exploded over the past few decades, so it makes sense that so many homeowners continue to invest in property,” Mr Zeller said.
“Our findings show people are diversifying their portfolio and investing their money in term deposits, super and cryptocurrency.”