Young Australians are suffering the most under the cost-of-living crisis, with many forced to take second jobs because of a lack of savings and sky high inflation, according to new data.
At least 70 per cent of Gen Z Australians are experiencing financial stress amid the fastest rate of price growth in more than 30 years, Finder’s annual cost of living report found.
That compares to 60 per cent of millennials and 45 per cent of Gen X Australians, Finder said.
Just 29 per cent of Baby Boomers reported experiencing financial stress as inflation has risen.
Greatest challenge in decades
“The economic conditions are some of the most challenging households have faced in decades,” said Finder CEO Chris Ellis.
“Young consumers, those who are renting, paying off a mortgage, or raising young children are feeling the effects most acutely.”
Finder’s report is based on its longstanding consumer sentiment tracker, which surveys 1000 Australians each month with questions about their financial situations.
It reveals more than half of young Australians are feeling so financially pressured that they’re looking for a second job in 2023 to make ends meet, with a lack of savings being a key issue.
While the average respondent had $30,000 in savings, Generation Z Australians had just $13,000.
Cost of living bites, but better news looms
With annual headline inflation running at 7.4 per cent in January, millions of Australians are feeling the squeeze at the supermarket, petrol station and with their utility bills.
Grocery prices rose sharply towards the end of last year, while petrol prices are still peaking at more than $2 a litre in capital cities at the high point of market cycles.
Energy costs are rising by double-digits and will ratchet up again in July, when new regulated prices kick in.
Rents are rising rapidly too amid near record-low capital city vacancy rates, and mortgage bills for those Australians who own homes have skyrocketed on the back of RBA interest rate hikes.
Against that backdrop, it’s easy to see why so many households are struggling.
Finder reports that almost four in five Australians have reduced their spending to deal with the budget squeeze, with about half cutting their grocery bills over the past year.
The good news, however, is that relief is on the horizon, with inflation starting to ease and economists increasingly expecting the RBA to pause its massive rate hike cycle next month.
Westpac now expects interest rates will peak at 3.85 per cent, not the 4.1 per cent it previously predicted, which implies just one more hike of 0.25 per cent in May (after a pause in April).
Westpac chief economist Bill Evans said on Friday that the RBA will not increase interest rates in June or July as it waits to see how Australians digest the impact of a quickly cooling economy.
“With the cash rate deeply in contractionary territory, the economy slowing at a more rapid pace, and evidence from the March quarter wage price index that the trajectory for wages growth remains moderate, it will be appropriate to delay any further tightening until the next quarterly inflation report, released ahead of the August board meeting,” Mr Evans said in a research note.
