Electricity costs still Aussie householders' biggest concern

July 2016 | CHOICE Consumer Pulse measures Australian attitudes to the cost of living.

Feeling the pinch

After two years of tracking how Australian consumers are feeling about financial pressures, the latest CHOICE Consumer Pulse has revealed some clear medium-term trends including ongoing concerns about the cost of electricity and superannuation.

The CHOICE Consumer Pulse is a quarterly, nationally representative survey designed to measure Australians' attitudes to the cost of living.

Our latest survey results show that thanks to low inflation and low wage growth the overall picture for consumers is relatively stable, but there are some continuing key pain points for consumers.

Energy costs still on the rise

Electricity bills are still the Australian consumer's number one worry, with 81% of those surveyed saying that this is the household cost that concerns them the most.

CHOICE CEO Alan Kirkland says this is unsurprising as little progress has been made in what he says is a dysfunctional energy retail market. "With continuing price rises and grinding complexity, it is no surprise that the merits of energy market regulations – and deregulation – continue to be questioned."

It's not just electricity – concerns about gas prices are also on the rise. And concern for both gas and electricity prices is being felt equally across high and low income households.

Economic outlook? Cloudy with increasingly uncertainty

Australians' optimism about the economy is on the slide, with just 24% of those surveyed rating the economy as good. The overwhelming sense is one of uncertainty, with 41% believing the economy is performing neither well nor poorly.

With plenty of economic concerns overseas, despite relative stability in Australia, it may well be the case that many Australians are just finding the economy's future prospects difficult to gauge right now.

Externally our financial worry continues to be focused on government spending cuts (65%) and Australians' individual levels of savings and investments (60%).

Feeling the squeeze

Almost three in 10 of those surveyed say that they are finding it difficult or very difficult to get by on their incomes. More than four in 10 (44%) say they are getting by, almost a quarter (23%) are living comfortably and just 4% say they are living very comfortably.

And the struggle from payday to payday is real for many of those surveyed, with more than one in six people (18%) saying they have lived off credit cards to get through to the next payday. Almost one in seven (14%) have borrowed money from friends or family. More than one in 10 (11%) have deliberately missed paying a bill by the due date, with those living in regional areas (14%) most likely to miss a payment.

Unsurprisingly, low-income households earning less than $50,000 per year are the most likely to be finding it difficult to get by on their income (43%). The level of financial distress some households are in is concerning, with 14% reporting having to deliberately miss paying a bill by the due date and 18% needing to borrow money from family or a friend in the last 12 months. Forty-two percent of low-income households say they are looking to cut back on groceries and food. For some it's difficult to see change on the horizon, with 37% believing the Australian economy is performing poorly at the moment.

Health worries over groceries

Another change of note is a shift in the concern for health costs (including health insurance) which this time around has overtaken concern for the costs of food and groceries as our second biggest household cost concern.

There was also an increase in people's concern over the cost of medicine (67%) and seeing a doctor (59%)

Home time

This time around there has been a nine percentage point jump in mortgage-holder concern about the cost of repayments (69%). The level of concern about renting costs is also 69%, although it has been trending down.

Despite this, renters have consistently been one of the groups feeling the most financial pressure in all nine Consumer Pulse surveys. Almost four in 10 (37%) renters say they're finding it difficult to get by on their present income, compared to one in four (26%) mortgage holders.

Retirement and super

When it comes to financial future-proofing, retirement income is another top worry for consumers. Over half (53%) of Australians say they are worried about the value of their superannuation, and concern about superannuation is highest among people living with parents, relatives or in share houses.

Despite the doom and gloom, let's spend (sometimes)

Despite plenty of concern about the bigger costs in life, overall consumers are reporting the lowest level of cutting back on expenses (58%) since the CHOICE Consumer Pulse began.

Despite this overall buoyancy there's still some little cuts being made, around half still say they're cutting back on entertainment and socialising (52%), clothing (48%) and big-ticket household purchases (46%) in the next few months. This lines up with lower than expected retail trade growth data, which shows growth in this sector is the lowest it has been in three years. 

Some people are continuing to cut back on television subscriptions (24%). With cheaper streaming services having been available for more than a year now, people may be downgrading from more expensive traditional pay TV options, although another 35% are planning on spending the same amount.

But it's not all belt-tightening, thanks to low global oil prices consumers are getting charged less when they fill up at the pump and we're seeing decreasing levels of concern about the cost of fuel.