NAB finds cost of living pressures ease for the first time in 18-months

For the first time in 18 months, Aussies are feeling more optimistic about spending, as cost-of-living pressures begin to ease.

Aussie households are finally seeing a light at the end of the tunnel, feeling less stressed about cost-of-living pressures.

After a tumultuous couple of years, there are signs Australians are starting to get on top of their living expense concerns, which have fallen to their lowest rate since early 2022.

According to data released by NAB Consumer Sentiment survey, Australians are feeling a little more optimistic about managing the cost of living and fewer are reporting higher prices for groceries, transport, eating out and rent.

NAB Personal Everyday Banking executive Kylie Young said the latest figures showed more people felt like they were taking back control of the cost of living and fewer were reporting higher prices for everyday items.

“After more than a year of budgeting being the hot topic around the dinner table, we may be seeing the first signs Australians are feeling in control of their finances again,” Ms Young said.

The sentiment survey, which is based on answers from 2000 Australians, showed overall they were feeling better about their finances, although cost of living still remains the biggest driver of consumer stress.

But the peak of the cost-of-living crisis might be over, with the survey data also saying fewer people are cutting back on going out to restaurants, broader entertainment or holiday plans.

“On average, Australians are still saving around $300 each month, or more than $3600 a year, which has helped build a buffer to weather the economic challenges,” Ms Young said.

NAB’s call that the worst of the cost of living could be behind us comes off the back of the ABS announcing last month that headline inflation had dropped to 2.7 per cent, from 3.5 per cent, the lowest it has been in three years.

In positive signs for businesses, Australians may soon be willing to spend more at the shops. Picture: NCA NewsWire / Diego Fedele

While the fall was welcome news, much of this was due to federal and state energy rebates. The combined impact of Commonwealth Energy Bill Relief Fund rebates and state government rebates in Queensland, Western Australia and Tasmania drove the largest annual fall in electricity prices on record of 17.9 per cent.

CPI inflation, excluding volatile items and holiday travel, was 3.0 per cent in August, down from 3.7 per cent in July. Annual trimmed mean inflation, which excluded both the falls in automotive fuel and electricity, alongside other large price rises and falls, was 3.4 per cent in August, down from 3.8 per cent in July.

“This is also an early glimmer of good news for small businesses who have been doing it tough over the past two years as households chose to cut back and prioritise the essentials,” Ms Young said.

“Australians are proving resilient, they’re looking for smarter ways to save and spend and, even though it’s early days, this may be an indication of a more ‘normal’ 2025.”

Originally published as NAB finds cost of living pressures ease for the first time in 18-months