Concern over government policy and next month’s federal budget have overtaken cost of living as the single biggest cause of consumer stress.
Australians are responding by putting more of their budget towards paying off debt, utility bills and medical expenses, according to NAB’s Consumer Anxiety Index for the first quarter of 2015.
They’re also cutting back on what they see as non-essentials such as entertainment.
The Consumer Anxiety Index rose to 61.8 points in the first three months of 2015 from 60.1 in the December quarter, with higher concern in all categories except health.
Other measures of consumer confidence, such as the ANZ Roy Morgan weekly index, are showing a small improvement in recent weeks.
Last year’s federal budget was widely blamed for declining consumer business confidence in Australia. Economists have increasingly been talking about the contribution low confidence is having on Australia’s economic outlook by keeping investment intentions subdued. Earlier this year, Australia’s most senior economic officials – the head of Treasury and the RBA governor – told the ministers in a Cabinet briefing that low confidence was holding the economy back.
This latest measure adds further weight to the views of market economists that the federal budget will be a key test for household sentiment.
About $11 billion in annual savings outlined in last year’s budget are held up in the Senate and it appears a return to budget surplus is unlikely anytime soon.
“As we approach the federal budget in May, consumer anxiety related to government policy is a significant concern for a large number of Australians,” says NAB Chief Economist Alan Oster.
Job security continues to cause the least stress and New South Wales and Tasmania were the only states to report lower anxiety, with consumer fears now highest in Victoria.
On household finances, not having enough to retire, being able to provide for the family’s future and meeting medical costs are causing the greatest concerns.
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