This may be coming out of left field, but we feel it’s not to be ignored.
Rising costs of living in Australia are pushing people to default on their utility bills.
Every May over the last few years, Australians have defaulted on their bills, and Dun & Bradstreet expects this year to be particularly severe.
“Thousands are likely to severely damage their (credit) profile because of credit overextension in the months ahead,” D&B said.
In two of the past three years, the number of defaults resulting from unpaid phone and utility bills jumped as much as 113 per cent, D&B data show.
“Not paying a small bill or a non-bank related credit obligation can negatively impact a consumer’s ability to access credit for up to five years so it’s absolutely critical that every credit commitment is taken seriously,” Dun & Bradstreet chief executive Christine Christian.
The central bank has hiked interest rates six times in eight months. According to the Sydney Morning Herald, resultant rising mortgage rates have added $300 Australian to the monthly payments of your average $300,000 mortgage. Nevertheless, despite rising rates, Australian property prices just jumped in March by the largest amount since 2003.
The country’s government also recently increased their inflation forecasts, saying inflation was likely to break above their tolerated band of 2 – 3%, to 3.25% by the middle of this year. Commodity prices are spiking around the world, which is good for Australian producers, but at the same time feeds into cost inflation for Australians who might not be directly benefiting from the boom.
Australia has to tighten monetary policy due to soaring property prices and inflation risk, but might they end up derailing their economy in the process? Utility bill defaults imply a squeezed consumer.
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