A startling report from Australian consumer group Choice has found two-thirds of Australian households are spending less on entertainment and clothing in an effort to make ends meet.

Those hardest hit, according to the report, were families with school-aged children.

In an even more worrying trend, one-fifth of those surveyed admitted to using their credit cards to pay for living expenses until their next payday.

Alan Kirkland, CEO of Choice said, “We are concerned to see these signs of household stress at a time when inflation and mortgage interest rates are historically low.”

Inflation rates have remained modest since 2009; while home-loan mortgages are averaging close to historic lows of 5 per cent.

And yet 85 per cent of those surveyed by Choice claim their household bills have increased over the past year. Electricity and fuel top the concerns, closely followed by grocery prices.

The ABS Wage Growth Index is showing its most sluggish growth since 1998, while Food and Grocery costs are said to have fallen marginally according to the ABS.

Mr Kirkland believed consumers are ‘particularly sensitive’ to changes affecting the cost of health, education, and childcare.

The choice survey was backed up by NAB’s Consumer Anxiety Index, published in early July. It found that living expenses followed by ‘government policies’ were the major concerns of householders since the last federal election.

“Addressing these concerns is important to our broader economic health, because when consumers feel scared about the future, they will refrain from the expenditure on goods and services that drives economic activity and employment,” said Mr Kirkland.

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