West Aussies to cut back on coffees, booze and holidays according to Chamber of Commerce and Industry survey

Cash-strapped West Aussies are vowing to spend less on coffee, booze and holidays as high interest rates and soaring cost-of-living expenses take a toll on family budgets. On the back of figures released this week, which show economic growth has slumped to its slowest rate in more than 30 years outside the pandemic, a Chamber of Commerce and Industry online survey of WA households reveals more pain is on the way for already-struggling businesses. The three-monthly survey, conducted last month, asked 900 people whether they planned to change their spending habits. Fifty-three per cent said they would reduce — or significantly reduce — spending at cafes, restaurants, pubs and bars for at least the rest of this year. Fifty-one per cent said they’d cut back on consumer goods, and 50 per cent said they’d need to tighten their belts by spending less on holidays, travel and entertainment. Alarmingly, 40 per cent said they would need to cut back on groceries. And 28 per cent would spend less on health care. “While inflation may be closing in on target (3.6 per cent nationally), it is returning to target more slowly than expected and prices remain at elevated levels,” CCIWA said in its report. “As a result, the increased cost of living remains the primary concern for WA households with 78 per cent of respondents reporting this is a drag on confidence over the June quarter — up five percentage points from last quarter.” CCIWA Chief Economist Aaron Morey said despite the cost-of-living measures announced in the State and Federal Budgets, many households were still feeling unsettled. A key cost-of-living measure announced by the Cook Government was a $400 power credit, while Federal Treasurer Jim Chalmers announced a $300 electricity bill credit on top of the July 1 tax cuts. “The five percentage point increase is a concern (as it) shows that even with inflation coming down, the elevated cost of living is still weighing down confidence,” Mr Morey said. “As a result, many households are looking for ways to spend less — and discretionary spending is the most obvious way they can do that.” High interest rates were also on West Australians’ minds as they looked at ways of saving money. “Over three in five (63 per cent) West Australians reported interest rates have deflated their outlook (on the WA economy), marking an eight percentage point rise from March,” CCIWA said. While thousands of West Australians were paying below 1 per cent interest on their mortgages pre-2022, changing economic conditions now see the cash rate at 4.35 per cent. An average home loan of $615,000 now costs families $3796 a month in repayments, compared to $2402 in April, 2022 — an increase of $1394 a month. And in further bad news for struggling WA homeowners, RBA boss Michele Bullock warned interest rates could go up again, if inflation was not brought under control. But it’s not just mortgage holders who say they’re cutting back. WA renters, now paying on average $600 a week for a roof over their heads, will be hardest hit according to the CCIWA survey. “The most likely to cut back spending on these discretionary categories are renters,” CCIWA says. “More than three in five (64 per cent) households that rent plan to pull back their spending on cafes and restaurants while a similar proportion (62 per cent) plan cutbacks on bars, clubs and pubs.”