FED:Australians struggle with household costs

AAP General News (Australia)
04-18-2011
FED:Australians struggle with household costs

EDS: EMBARGOED until 0001 (AEST) Monday, 18 April, 2011



By Tanalee Smith

ADELAIDE, April 18 AAP - The rising cost of essentials such as health care, utilities
and fuel means more households are struggling to keep on top of their bills, a financial
survey says.

The cost of living has increased, on average, 7.5 per cent across the nation, more
than double the official inflation rate of 2.7 per cent, financial group ING Direct says
in its Financial Wellbeing Index for the first quarter of 2011.

"Governments need to realise households are under more pressure than official figures
are showing," said ING Direct chief executive Don Koch.

"That pressure extends across the entire household budget from consistent costs like
mortgage repayments to everyday essentials like food and fuel."

The report, released Monday, says median savings have declined from $9238 in the last
quarter of 2010 to $7214 in the first three months of this year.

One in three households are uncomfortable with their level of savings, and close to
half have no investments outside the family home, the report said.

Queenslanders, who are still recovering from disastrous floods and cyclones, suffered
the biggest hike in living costs - 8.3 per cent over the past year, compared to 6.3 per
cent in NSW.

Also in NSW, eight out of 10 households say electricity and phone costs have become
more expensive over the past six months. More than 80 per cent also say fuel and transport
costs have risen.

In South Australia, 11 per cent of homes say they are finding it impossible to pay
bills on time, while 44 per cent are uncomfortable with their ability to keep up with
essential expenses.

Median savings in SA are just $2741 - well short of the national average.

"On a positive note, South Australians have the lowest credit card debt and lowest
median mortgage balance in the country, which could potentially contribute to a healthier
household balance sheet," Mr Koch said.

ING Direct's index was compiled from responses of 1033 households across the country.

The rather gloomy figures of the index contrasted sharply to another survey of consumer
sentiment released on Sunday.

Financial researcher CoreData found Australians were more optimistic about their financial
outlook as pressure eased on household bills.

Andrew Inwood, managing director of CoreData, said more people had a regular income
and were saving or investing more money.

"Household finances have improved considerably since the end of 2010, with more Australians
able to save and fewer just being able to make ends meet or are running into debt," Mr
Inwood said.

CoreData's Investment Sentiment Index, a survey of 877 people, showed 49 per cent were
able to save money, a jump from 42 per cent in the previous quarter.

It said SA and NSW were the most optimistic states about the next quarter's economic
situation and, overall, fewer respondents were running into debt.

The reports come less than two weeks after the Reserve Bank of Australia (RBA) voted
to keep interest rates unchanged for the fifth straight month, saying near-record highs
for the dollar had helped to keep inflation in check.

AAP ts/jhp/cdh

KEYWORD: HOUSEHOLD EMBARGOED

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