It's a mixed bag of emotions for Australians who have to focus on value
The National Australia Bank (NAB) has released its Consumer Sentiment Survey for Q3 2023, revealing a consumer market that is beginning to show signs of adaptability and resilience under pressure. The findings indicate a rise in the Consumer Stress Index to 57.7 points, marking an increase for the fourth consecutive quarter.
Still a predominant concern for Australians, cost of living stress managed to ease after escalating for seven consecutive quarters. Despite this, 8 in 10 Australians still believe living costs surged further in Q3. The report highlights a “great reprioritisation” among consumers, with many making deliberate trade-offs to balance spending with lifestyle and manage household budgets.
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“Consumers are stretched, but many are growing more accustomed to these pressures,” the report said. Employment stability has also played a crucial role in cushioning the blow of rising expenses.
The survey reveals a significant shift in consumer behaviour, with many Australians cutting back on discretionary spending. One in two are cutting back on eating out, entertainment, and car travel, creating an annual savings buffer of $3,900 on average, indicating a strategic approach to financial management amid economic pressures.
At the same time, consumer spending remains robust. NAB’s transaction data shows a resilient consumer base, with a focus on value and a noticeable shift towards less expensive products. The rise of eCommerce during the pandemic is now seeing a slight reversion, with consumers gradually returning to in-store shopping.
“Australians are now flexing their personal budgeting muscle to manage shifting price pressures,” NAB group executive Rachel Slade said. “There is no doubt the past 12 months have been tough, but we’ve seen Australians build their resilience and they are telling us they feel better prepared to adapt by reprioritising their spending.”
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Job security remains a concern, with the stress index in this area rising to 43.3 points. However, it’s still below the long-term survey average. The employed demographic is showing notable resilience, supported by robust employment growth and the strongest wage growth since 2012.
The unemployed, lower-income earners, and people renting a house are feeling the pinch the most, with higher stress levels reported in these groups. In contrast, retirees and those above 65 years are experiencing the least stress.
