Financial hardship hits 44pc, younger Aussies bear brunt: NAB

A new NAB survey has revealed that nearly half of all adults are experiencing some form of financial difficulty, with hardship levels reaching a record high.

A new NAB survey has revealed that nearly half of all adults are experiencing some form of financial difficulty, with hardship levels reaching a record high and particularly affecting younger Australians.

Australia’s economy has proved resilient to high inflation and the resulting 13 interest rate increases over the past year or so in order to control it.

But the rising cost of living is putting a strain on household budgets and hardship levels have now reached 44 per cent, a new NAB survey high, as more Australians struggle to make ends meet.

Hardship has now risen from a survey low 29 per cent in the first quarter of 2022 and is trending well above average 37 per cent, the survey shows.

Bearing the brunt of financial hardship are younger individuals aged 18 to 29, with 56 per cent reporting some form of financial difficulty in the three months leading up to the end of October.

“This increase has occurred against a backdrop of rising inflation (particularly for every day essentials such as groceries, petrol, gas, and electricity), and rising interest rates,” NAB’s consumer insights report says.

The most common types of hardship are not having enough money for an emergency (26 per cent), not having enough for food & basic necessities (19 per cent), or being unable to pay a bill (18 per cent).

Older homeowners with substantial savings have largely weathered the economic storm, as nearly half of Australia’s accumulated savings are held by people aged 55 or over.

The quarterly results come even in a period of relative calm at the Reserve Bank of Australia following its aggressive interest rate hike of 4 percentage points over the previous year.

However, the bank resumed its tightening cycle this month, raising rates to 4.35 per cent, the highest level since 2011.

RBA governor Michele Bullock last week acknowledged that higher prices combined with higher interest rates were hurting many in the community.

“I receive letters from people who are finding it difficult to make ends meet,” she said in a speech on Friday.

“Everyone is seeing prices for goods and services rise strongly but this has a particularly severe impact on low-income households. This emphasises the need to get inflation back down.”

The Reserve Bank is estimated to be closer to the end of its interest rate hiking cycle, but Ms Bullock has made it very clear the bank will do whatever it takes to bring inflation back to its 2 to 3 per cent target by the end of 2025.

Financial hardship is most widespread in rural areas, where 6 in 10 people are affected in the three months to October.

This is almost twice as high than in capital cities where 34 per cent of people experienced some form of financial hardship in the last 3 months, the survey shows.

By state, financial hardship is most common in Tasmania (64 per cent), followed by Queensland (59 per cent), South Australia (58 per cent) and Western Australia (57 per cent).

NAB found 25 per cent of the people surveyed agreed very strongly with the statement: “I am struggling to make ends meet”.