The Reserve Bank of Australia has raised its cash rate to 4.6% this week, marking its highest level since 2011. This increase is occurring as many Australian households report heightened financial strain.
Recent data from the Household, Income and Labour Dynamics in Australia (Hilda) survey indicates a decline in financial wellbeing and an increase in housing stress and food insecurity among Australians. The survey, which tracks over 17,000 Australians annually, found that perceptions of financial future have generally worsened since 2020.
Food insecurity, defined as a persistent inability to afford adequate food, rose from 13.7% in 2020 to 17.9% in 2024. This data was collected before the succession of rate rises and fuel price hikes this year.
Experts from the University of Melbourne's school of population and global health suggest that financial hardship is a public health issue. They note that persistent financial stress can undermine a person's sense of control and security, potentially increasing the risk of mental health problems like depression and anxiety.
The association between financial hardship and poorer mental health has become significantly stronger during 2022-2024, according to research. This suggests that the impact of hardship on mental health has intensified during the current cost-of-living crisis.