Aussies slash spending as inflation and rate rises continue to impact

- August 1, 2022 3 MIN READ

Research from consumer intelligence platform, Toluna, reveals Australians are making drastic changes to the way they spend and save money – including reducing how much they drive, delaying travel, and putting off buying a home.

Nine out of ten Australians (94 per cent) say they are extremely concerned by the impact of inflation with young homeowners most impacted. 75 per cent of 18-34 year-olds are concerned about mortgage repayments, with 18 per cent looking for ways to make additional income, and 16 per cent selling personal items in order to increase cash flow.

Cost of living prompts changes in spending 

With essential items such as petrol and groceries skyrocketing, Aussies are putting off spending on less urgent items, such as upgrading tech devices like mobile phones and tablets (20 per cent), home repairs and renovations (20 per cent), and buying major appliances (18 per cent). One in four (25 per cent) are stocking up on certain items before prices increase further.

Subscriptions services are also seeing a decline, with 12 per cent of Australians cancelling their entertainment subscriptions as they attempt to save money. Other cost-cutting measures include downgrading mobile plans and cancelling landlines. While one in ten Aussies are shopping around for cheaper health coverage or cancelling life insurance. Some have even reduced how much they’re paying down credit cards (7 per cent) and paying off student loans (4 per cent).

Discretionary spending declines

In an attempt to curb their spending, close to one in four Australians have cancelled or delayed travel plans (23 per cent) and 69 per cent are more likely to prepare meals at home due to the cost of eating out. Even coffee is on the chopping block, with one in four (27 per cent) Australians having reduced the amount they spend on buying take away coffees.

A third (36 per cent) of respondents believe the rising cost of living will mean having less to spend on Christmas this year.

Sej Patel, Country Director, Toluna, Australia & New Zealand said the findings show Australians are prepared to make radical changes to their spending in order to save money.

“Our research shows that consumers are truly feeling the pinch of rising inflation. Australians are doing everything they can to cut back and financially safeguard themselves as much as possible – delaying travel, driving less, eating in, and putting off any unnecessary spending.”

On the hunt for extra income

Costs are increasing so much that one in ten (10 per cent) Australians have sought an additional form of income, such as signing up to gig work services like Uber or DoorDash. This figure is higher amongst younger people, with 18 per cent of 18-34 year-olds and 13 per cent of 35-54 year-olds seeking additional forms of income. Some Australians (13 per cent) have even turned to selling personal items to make extra cash, while 12 per cent of have sold investments to boost cash flow.

Mortgage repayment concerns  

Due to the recent interest rate hikes by the RBA, over half (58 per cent) of Australians are concerned about paying their mortgage, with 35 per cent either very (16 per cent) or extremely (19 per cent) concerned. Unsurprisingly, younger generations – who have typically paid down less of their mortgages – are more concerned about rising interest rates, with over three quarters (82 per cent) of 18-34 year-olds concerned about mortgage repayments, compared with 73 per cent of 35-54 year-olds, and only 28 per cent of over 55s.

A third (32 per cent) of respondents are either actively trying to refinance or will try to refinance within the next six months. This goes up to over half (56 per cent) for those between 18-34 years, and slightly less (42 per cent) for those between 35-54 years.

Inflation has resulted in one in ten (9 per cent) Australians putting off plans to buy a home altogether. This increases to 13 per cent of 18-34 year-olds, and 11 per cent of 35-54 year-olds.

Petrol prices bite

Inflation and the skyrocketing cost of petrol has resulted in one in three Australians actively reducing how much they drive. In a bid to permanently avoid petrol costs, one in four (26 per cent) Aussies say their next car will be run using alternative energy, such as a hybrid or electric vehicle.

Rising costs have also resulted in 16 per cent of Australians putting off their plans to buy a new vehicle, while 14 per cent are delaying spending on their car’s general maintenance and repairs.

 68 per cent of Australians believe the country is headed toward a recession.

“With consumers cutting spending at every turn, businesses must identify ways to demonstrate value in order to retain customers,” said Patel.

“In this economic climate, price is the number one factor when it comes to purchasing decisions right now. However, brands and retailers cannot forget that Australians are also now shopping more consciously than ever before and taking the time to research where brands stand on ethical matters. Along with value for money, brands should continue to communicate what they stand for in order to continue attracting and retaining their core customers.”

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