A report published by the Committee for Economic Development of Australia (CEDA) indicates that household financial pressure has climbed back to levels last recorded during the post-pandemic period, reversing gains achieved from 2023 onward and pointing to a prolonged stretch of elevated economic stress ahead. The organisation projects that economic hardship indicators will stay notably above the averages recorded in recent years at least through the close of 2028, with households facing ongoing pressure from rising prices, elevated borrowing costs, and a labour market that has begun to soften.

CEDA's misery index draws on inflation, unemployment, and interest rates to construct a broad gauge of the financial strain households face, with the organisation's economics head Liam Dillon noting that upward movement across those indicators tends to tighten budgets and add to the cost-of-living burden on families. CEDA attributed the recent uptick in the misery index primarily to elevated prices and higher borrowing costs, with Dillon noting that the index had been on a downward trajectory from 2023 as inflation eased and the Reserve Bank moved to cut rates in response, though he added that price pressures had since proved more stubborn than anticipated.

Prompted by a combination of those pressures, the Reserve Bank lifted its benchmark rate to a 15-year peak. Annual inflation had briefly returned to the two-to-three per cent band the bank targets — touching that range in 2025 before climbing to four per cent in the year through August — with a source familiar with the data noting that the earlier gains in reducing cost-of-living pressure had been unwound, with conditions broadly back to where they stood in 2023. Four rate increases by the Reserve Bank over the course of this year have pushed the official cash rate to a point not reached in a decade and a half, with a portion of economists forecasting at least one further adjustment before 2026 draws to a close.

Government figures published on Thursday put the jobless rate at 4.7 per cent for September, a level not recorded since October 2021, adding weight to existing anxieties about the labour market's direction. Data published by the Australian Bureau of Statistics on Thursday point to an employment market that has been gradually easing. The August figure was revised upward to 4.7 from an initial reading of 4.6. Over the course of that month, the workforce shrank by 39,300 people, with the pool of jobless Australians growing by a further 8,900. That figure also came in above the level the Reserve Bank had projected for the jobless rate to hit by the end of the December quarter.

Alongside other findings, the report highlights a wider mood of economic unease, with household confidence holding at readings last seen when the pandemic gripped the economy. Higher borrowing costs and a sustained run of price increases have nudged a composite measure of economic discomfort upward, even as a labour market holding relatively firm has provided many households with a degree of financial footing. That foundation has shown signs of erosion.

In the decade before the pandemic arrived, unemployment averaged 5.5 per cent across those years and reached a peak of 6.3 per cent around late 2014. Joblessness has held at roughly four per cent on average in the years following the pandemic.

Notwithstanding the broader economic deterioration, Dillon described the jobs market as a pocket of relative durability, noting that while unemployment had been climbing, the labour market continued to display signs of resilience that were helping to cushion household finances. CEDA's figures put the number of positions created in the calendar year to date at roughly 177,000. Dillon noted that the development had offered households some degree of protection against the pressures of elevated inflation and borrowing costs, with household savings still sitting above their pre-pandemic decade-long average.

According to the report, lowering the financial hardship many people face remains a persistent challenge, given that measures aimed at curbing inflation can put pressure on jobs and broader economic output. Interest rate adjustments have served as the Reserve Bank's principal tool for drawing inflation back toward its target range, a path that places added financial pressure on households already contending with elevated day-to-day costs.

Records from the Reserve Bank's September gathering, published this week, revealed that staff had grown increasingly concerned that sluggish productivity gains could push the jobless rate above previously accepted levels to hold inflation in check. Dillon contended that lifting productivity stands out as the one mechanism that bears on all three components of the index at once, while noting that any measurable effect would take shape over a longer horizon rather than within months — a view CEDA's own modelling supports, with the index forecast to sit above its recent historical norm through to late 2028.