Australians are cutting back on coffees and holidays as they grow accustomed to the ongoing cost of living crunch and are making deliberate spending trade-offs, new research from NAB shows.
Released on Friday, fresh consumer sentiment data shows that while Australians are less stressed about inflation than they were three months ago, ongoing price pressures continues to weigh heavily on many Australians.
According to the NAB report, consumers expect that paying for necessities, including groceries, rents, mortgage repayments, transport costs and utilities, will take up a greater proportion of household incomes, and are consequently sacrificing spending on major purchases. In response, four in 10 Australian consumers made more modest holidays plans, while around one in three cancelled or delayed a major household purchase such as a TV or washing machines, the report found.
Asked if inflation would abate in the future, 67 per cent of consumers expect higher prices in 12 months time.The Reserve Bank is wary of consumers’ inflationary expectations, noting that if households believe persistent price pressures are here to stay they will continue to spend, meaning rates may have to stay higher for longer.
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