Australian consumers are still feeling the effects of the cost-of-living crisis, with food and utility costs still top concerns, according to the latest NielsenIQ survey. Consumers are spending less on clothing and out of home eating while expecting to spend more on utilities, rent/mortgage, groceries and household items.
Almost half (48 per cent) of Australians said they were in a worse financial position compared to a year ago, which was down four points. Just over half (52 per cent) said they were not financially impacted but were still cautious with spending, while 19 per cent categorised themselves as ‘strugglers’ – up from 17 per cent in 2023.
Nielsen found 11.4 per cent consumers expected to shift their spending to more fresh produce while 37.2 per cent said they would curtail their spending on snacks and confectionery.
The study found that while Australians were going out less often, 41 per cent of 18-34-year-olds said they were going out to bars and restaurant more than usual. Twenty-four per cent said they were going out the same amount as usual, and 35 per cent were going out less often.
NIQ said the OECD Economic Outlook expects inflation will continue to ease and the global economy is to experience steady growth in 2024 and 2025. “Australia is expected to grow its GDP by 1.5 per cent in 2024 and 2.2 per cent in 2025,” it said.
According to NIQ, many ANZ consumers anticipate increased spending on essential categories like utilities, housing, groceries, and transportation. Conversely, they plan to reduce spending on non-essential items and experiences, including clothing, dining out, takeaways, entertainment, and appliances.
NIQ director Customer Success, Marco Silva, said retailers and brands should still expect shoppers to be cautious, while noting where growth can be expected.
“We all know that consumers have been through a lot of difficulties over the last five years,” Silva said.
“Half of ANZ consumers still feel in a worse financial position due to a higher cost of living, and there is a higher proportion of struggling consumers in both countries compared to years ago.
“However, decelerated inflation, combined with immigration, has helped fast-moving consumer goods to grow volume again after a few years, driven by higher prices driving value growth. To manage their budgets, consumers are looking into buying on promo and private label, as well as shopping at alternative retailers to search for better deals.
“Brands cannot ignore this and need to ensure they are mapping how they are executing and how present they are at alternative retailers, as this is the piece of the market that is growing the fastest.”
NIQ suggests that several trends are emerging that will shape how Australians and New Zealanders interact with and consume FMCG products, including: increased immigration levels leading to changing demographics and consumer preferences; the rise of GLP-1 drugs for diabetes management potentially influencing food choices towards healthier options; and the ongoing growth of omnichannel shopping combined with online trends such as Retail Media Networks (RMNs) and Social Commerce.
Click here to download NIQ’s ANZ Mid-Year Consumer Review: Guide to 2025 report.
