As many as four in 10 Australians are now suffering financial hardship as the cost-of-living crisis combines with record-breaking interest rate hikes to deliver an unprecedented budget squeeze.
The latest report from the National Australia Bank (NAB) reveals the number of people struggling with bills, rent, grocery costs and mortgage repayments is the highest since COVID-19.
The running survey of 2000 Australians found about 20 per cent don’t have enough money to pay for an emergency, while about 16 per cent are unable to afford food and other basics.
One in five people have missed a utility bill payment in the past three months, the report found.
Spiralling living costs and steep interest rate hikes are to blame for the three-year peak in financial hardship, with inflation running at a 30-plus year high and rates at decade-highs.
The cost of monthly repayments on a $500,000, 25-year mortgage have risen more than $900 between May 2021 and February 2023, and that figure will rise by another $77 if the Reserve Bank hikes rates in March.
Economist Nicki Hutley said the RBA has taken a hawkish tone, despite inflation pressures beginning to ease in January figures from the ABS.
However, many other bills are set to continue rising – including rents and utility costs – Ms Hutley said, squeezing many families even harder.
“There’s a huge amount of pressure here,” Ms Hutley said. “People are doing it tough.
“These numbers have faces and we need to remember that.”
Financial hardship: State-by-state
NAB said the increase in financial hardship was being driven by higher interest rates and the cost-of-living crisis, with job losses the biggest risk.
Across the country, financial hardship was most evident in Tasmania, where 45 per cent of respondents were struggling.
Next was the ACT/NSW, where 44 per cent were doing it tough.
Hardship also rose in Queensland (42 per cent up from 34 per cent) and remained steady in Victoria at 37 per cent. In Western Australia, South Australia and the Northern Territory financial hardship actually fell.
However, NAB said these broad measures are hiding rising levels of serious financial struggles, which was evident across the nation.
About 24 per cent of those in Queensland said they were “really struggling to make ends meet”, leading the states and territories.
And, unsurprisingly, socioeconomic status also plays a massive role.
“It was hardest to make ends meet in the lowest income group,” they said.
“That said, all income groups reported having struggled more to make ends meet in [the December quarter] than in the previous quarter.”
Bill pressure hits Australians
A rise in Australians not having enough money for an emergency was the most prevalent issue identified by NAB in the fourth quarter, and was particularly evident among younger people.
It affected more than a quarter (28 per cent) of 18-20 year olds, who also were more likely to report not having enough money for basic necessities and food (at 28 per cent), or being unable to pay a bill (23 per cent).
Mounting bill pressure was also identified in the survey, with a larger number of Australians under 50 also saying they were unable to pay their rent on time amid rapidly rising prices.
“When all Australians were also asked what type of payment they had missed, the most common, according to one in 10 people, were utility bills for electricity, gas and water (9 per cent), and utility bills for phone and internet (9 per cent),” NAB said in its report.
“Loans from friends or family (7 per cent), insurance (6 per cent), credit cards (6 per cent), BNPL (6 per cent) and housing rent (6 per cent) were next.”
