High employment eases cost-of-living pressures – NAB

by Micah Guiao24 Jun 2022

Record-low unemployment rates are putting people at ease amid a backdrop of higher living costs, according to NAB.

The bank’s consumer stress index increased for the second consecutive quarter from 55.7 points in Q1 to 56.4 points in Q2. The index was primarily driven up by the stress associated with the cost-of-living, jumping to 67 points in the quarter.

This comes as more consumers are noticing price increases across a number of key categories.

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While the stress associated with the cost-of-living is at its highest since 2018, Australians don’t seem to be too perturbed as job security is relieving household stress. This offset puts the consumer stress index for the quarter well below the average of 58.7 points in the past 10 years.

“When we look at our customers, as a whole they are in a really good position right now – in fact 70% are ahead on their mortgage payments giving them financial flexibility,” said Rachel Slade (pictured), group executive for personal banking at NAB.

 “We also know that having job security is critical to relieving household stress – the high rate of employment in Australia right now is doing a lot to put people at ease.”

However, the NAB Consumer Stress Index also found that the unemployed continue to have the highest stress across the groups – and by a large margin.

Slade also acknowledged that not everyone was in a comfortable financial position, which is why the bank established NAB Assist. The specialised team focuses on providing customers experiencing financial hardship with additional care.

“As a bank we’ve never been in a better position to help,” Slade said. “There are many things we can do to help from discussing flexibility around home loan payments to providing tailored budgeting tools. And we are seeing many customers make their own adjustments – 40% of Australians are now creating and following a budget which is brilliant.”

Read more: Inflation, low unemployment drive change

A greater shift to more careful budgeting among customers was reflected in NAB’s previous research, which revealed that half of Australians were switching to cheaper brands, turning off unused appliances and making fewer car trips to cut down costs.

However, making certain adjustments in non-essential spending might no longer be enough to ease household pressures if the RBA decides to lift the cash rate by another 50 basis points in July as economists have predicted.