The Reserve Bank's decision to lift the cash rate to 4.6% this week—the highest since 2011—has intensified the cost-of-living crisis for Australian households, with new data revealing widespread housing stress, declining financial wellbeing, and food insecurity. Experts warn that the situation is not just an economic problem but a matter of public health.
Justin Everitt, a third-generation grains farmer from southern New South Wales and vice-president of NSW Farmers, said his first thought upon hearing the news was: "Oh shit, another kick in the guts." Already grappling with soaring fuel costs that hamper his work producing wheat, canola, barley, beef, and lamb in Brocklesby, the rate rise could not have come at a worse time for the father of two.
"You're already pushing the boundaries of anything you can do," he says of working longer and harder. "It's unsustainable."
Survey Shows Worsening Financial Wellbeing
According to last week's Household, Income and Labour Dynamics in Australia (Hilda) survey, which follows the lives of more than 17,000 Australians each year, more people are reporting housing stress, a decline in financial wellbeing, and food insecurity. The survey found a general worsening in perceptions of financial futures since 2020, with average financial wellbeing worsening for 24.1% of females and 20.8% of males, and fewer people feeling "on top of everyday finances."
Housing stress surged, and food insecurity—described as a "highly persistent" inability to afford adequate food—increased from 13.7% in 2020 to 17.9% in 2024. Notably, this data was collected before this year's rate rises and fuel price hikes.
Elsewhere, a Lowy Institute poll revealed that, for the first time, more people are pessimistic about Australia's economic performance than optimistic. Insights from the Scanlon Institute linked increasing emotional distress to financial difficulty, and the General Social Survey showed a rise in financial stress, with one in four households having at least one cashflow problem in the past year, a figure that almost doubled for single parents.
Mental Health Toll
Taylor*, who rents in Sydney's Parramatta suburb with her husband, was squeezed out of her umpteenth rental three years ago. Although they have since secured a long-term lease, she still struggles with the mental toll of how expensive life has become. "I feel hopeless about it," she says. "It's affected my sleep the most, especially when my credit card payment is due. [I keep thinking] am I going to be able to pay it? What does it look like for the month ahead?"
As a therapist, she sees the stress in her patients too: their sleep is compromised and many feel there's no reprieve from everyday bills. Dr Lay San Too and Dr Yamna Taouk, senior research fellows at the University of Melbourne's school of population and global health and co-authors of a new paper on financial hardship and mental health, say the situation is a matter of public health.
"When people feel that everything is becoming more expensive, and that working harder still isn't enough to get ahead, it can create ongoing stress and a sense of loss of control," Taouk says, adding: "Over time, persistent hardship can undermine a person's sense of control and security and may increase the risk of more enduring mental-health problems, including depression and anxiety."
Too says their study did not include Hilda data from this year and last year, but the "implications are concerning" given the "additional and persistent increases in interest rates, and fuel and energy prices."
Personal Struggles and Adaptations
Taylor and her husband have drastically altered their lifestyle: they shop late at night to buy discounted meat and ready meals, socialise on walks instead of evenings out, and ask for supermarket gift cards for birthday presents because they "need groceries more than other items." She also takes her medication every second day to stretch out time between refills. Taylor had given up hope of buying a house but had hoped to buy an apartment; facing the reality that it isn't going to happen, even on a "very good salary," has been a "reckoning."
Lauren Bennett, a single mother with a full-time government job, says, "My salary is enough for us to 'get by' but we have given up so much. This city isn't made for single salary households, especially single parents." She bought a "modest" apartment in Sydney's inner west in 2021 using the single parent loan scheme, but rate rises have eaten into her savings, leaving her feeling "numb." She has cancelled her gym membership and streaming services, rarely buys meals or coffee, and has cut her own medical appointments to prioritise her eight-year-old's specialist fees.
"I really miss the ability to fund experiences that make important memories and it clearly affects my child," she says. "These last couple of years I have had to take away or reduce things more and more. There is not much more to cut. Plus, everything keeps going up so a cut back here is quickly absorbed somewhere else ... I always say 'we can do hard things' but like most people I'd really appreciate less hard things."
Families Delayed and Powerlessness
Erin Richardson, 31, has delayed starting a family with her partner, even though she says she has been mentally ready for more than five years. "I've heard having kids tanks your borrowing capacity," she says. "Everyone says that you manage, and I want to believe that you just survive and you just get by. That might have been the case previously, [but] I don't think anyone's going to step out and pay my mortgage or daycare costs."
Richardson, who lived with family until she could buy her Newcastle home, says maternity leave and grocery costs do not help. "It's scary," she says. "It feels like uncharted waters because it's such a different climate to what it has ever been. We're in this state of affairs where prices jump frequently and that just feels so unfair. There's no end to it and you feel powerless."
For Everitt, that powerlessness is literal: petrol affects "every aspect" of farming—from machinery used in harvest to distribution—with a flow-on effect for consumers. "If we can't harvest in the right time, there's no wheat for bread or barley for beer," he says. "It'll come at a cost to us but if freight doesn't move then the food doesn't get into the markets." He thinks the tipping point has been and gone. "This is the onslaught of the punches after you've been knocked out," he says. "You [are not] able to turn off from it. You can't shut down from the cost-of-living crisis."
*Name has been changed.
