Cheap spirits, pricey condoms: how war in the Middle East is shifting the way Australians spend

3. Bedding anxiety

The deterioration in consumer confidence has been rapid, with many households already paying more on their mortgages before rising petrol prices took hold in March.

The closely watched Westpac-Melbourne Institute consumer sentiment index shows anxiety over jobs has reached levels not seen since the pandemic.

Households have responded by forgoing purchases of furniture, bedding and home appliances.

Over the past two months, shares in furniture retailer Nick Scali have fallen about 20%, Harvey Norman is down more than 25% and homeware stockist Adairs has dropped by more than 30%.

Richard Hemming, the editor at Under The Radar Report, says retail is “at the forefront of your discretionary dollar”.

“People don’t like war, it’s a confidence killer,” Hemming says.

“You’ve got a lot of headwinds at the moment. The environment is one of consumer constraint, and retail is at the front of that.”

There are some brighter spots in retail, with Scentre Group reporting strong foot traffic at its Westfield centres, suggesting Australians are still enjoying shopping outings.

4. Consumed by worry

As the Middle East conflict enters its third month, the cost of the oil crisis is starting to ripple across the Australian and global economy, affecting the prices of a surprising array of products.

The world’s top condom producer, Malaysia’s Karex, plans to raise prices by up to 30% if supply chain disruptions drag on, while several Australian building suppliers have announced price rises of a similar magnitude for PVC pipes.

Soaring fuel, fertiliser and transport costs will also feed through to higher prices in supermarkets.

Spending data from Zip shows there has been an increased use of its buy now, pay later platform over the past three months for essential items including utilities, insurance, education and health.

While Australia’s jobs market is still robust, the sheer speed of the deteriorating global situation, and concern over prolonged disruptions to energy supplies, has people worried.

This contrasts with the upbeat outlook evident less than a year ago, when inflation seemed to be under control and interest rates were falling.

Kirsty Robson, a senior financial counsellor from the Consumer Action Law Centre, says more people are calling the national debt helpline due to anxiety about their future, when traditionally they would only seek help after suffering a financial event such as a job loss.

“Mortgages are now the top presenting issue,” Robson says.

“People have very future-focused anxiety because they are unsure how they will afford to pay for things.

“They are panicking, and perhaps rightly so, about how they’re going to manage in a couple of months’ time because they are reaching their financial capacity now.”