Cost of living crisis ‘overblown’, experts say in shock finding

More than a third of money experts say Australia is not in a cost-of-living crisis, despite high levels of financial stress across the country.

The latest Finder economic sentiment tracker found that while 72 per cent of experts still had a negative outlook on cost of living, 35 per cent said “crisis” was not the right term.

Stephen Miller from funds management company GFSM said the sentiment was “overblown”.

“It has cost-of-living challenges brought on by long-term neglect by governments (state and federal; Labor and Coalition) of productivity enhancement and an ignorance of regulatory burdens on businesses and ultimately consumers,” he said.

Respected economist Saul Eslake of Corinna Economic Advisory agreed.

“While I absolutely recognise that some households - including in particular those on low wages, and those with big mortgages - are ‘doing it tough’, I think the word ‘crisis’ exaggerates the circumstances confronting a majority of Australian households,” he said.

“Maybe that’s because I’m old enough to remember the double-digit inflation, unemployment and interest rates of the late 1970s and 1980s.”

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Macquarie University’s Jeffrey Sheen also demurred, while acknowledging prices on goods and services seemed overly high to many Aussie households.

“However real wages are gradually trending upwards, and hopefully this will continue,” he said.

“Inflation of these prices is actually modest, even if still above the RBA’s target range of 2 per cent to 3 per cent. So Australia does not have a crisis in the cost of living.”

Despite this significant minority of dissenters, most of those surveyed by Finder said “crisis” was indeed an appropriate term.

And Finder said 81 per cent of Australian households were experiencing financial stress in June, its latest measurements.

“Macroeconomic indicators might be cooling on paper, but millions of people are still confronted with very high housing costs and expensive everyday bills,” Finder money and home loans expert Richard Whitten said.

He said recent research showed 43 per cent of Australians had less than $1000 in savings.

Stella Huangfu from the University of Sydney said cost of living remained a significant challenge, with prices having been driven “much higher” by inflation.

“Many households continue to face pressure from elevated housing costs, higher mortgage repayments and increased prices for essential goods and services,” she said.

“Inflation is easing, but affordability has not yet fully recovered.”

Scott Kuru from Freedom Property Investors invited doubters to ask people on the street.

“Don’t take my word for it,” he said.

“Ask people at the supermarket checkout, the petrol station or the ones queuing up at rental inspections.

“They’re the ones that will tell you it ain’t all unicorns and rainbows.”