Savings account news: Families better off than in 2006

Families are in a stronger financial position than five years ago, new research has claimed.

New research has indicated that Australian households are in a stronger financial position than they were back in 2006 - prior to the global recession - potentially leaving people with more money to place in a Savings Account.

According to the Courier-Mail, data from IBISWorld indicated that the prices of some consumer goods have actually eased in recent years, having been overtaken by the rate of wage increases. The report suggested the recent slump in sentiment had been somewhat overdone.

"Despite consumers still exhibiting slow spending, current wages growth is actually outpacing cost-of-living increases," said the company's Australian general manager Karen Dobie. "Add to this the fact a range of consumer goods have decreased in cost, Australians are in many ways better off right now than we think."

However, Brisbane mother-of-two Clare Morgan told the news provider she had seen little improvement in her own family's finances, despite having returned to part-time work and husband Matthew working full-time.

Speaking to BBC News, Australian Retailers Association chief executive Russell Zimmerman issued a gloomy assessment of consumer confidence, with an increasing number of people simply unwilling to spend on their credit cards in the current climate.

He singled out uncertainty over interest rates, soaring utility bills and the one-off flood levy imposed to pay for the damage caused by this year's natural disasters in Queensland and Victoria as key causes for concern.

Mr Zimmerman added that he does not anticipate a significant improvement until at least next year and urged the Reserve Bank of Australia to hold back on increasing interest rates over the short to medium term.

Last week, upmarket department store chain David Jones admitted revenues for the recent quarter are likely to be down by around 11 per cent on the same point in 2010, with a growing number of families cutting back on luxury spending.

Meanwhile, according to the Savings blog, treasurer Wayne Swan has sought to reassure savings account holders about the Australian economy's medium-term prospects, insisting an upturn in growth is just around the corner.

According to Reuters, Mr Swan urged consumers to have more confidence in the strength of the country's finances, but acknowledged a number of factors had contributed to recent weakness.

"There are swings and roundabouts happening in the economy at the moment, which have produced a temporary softness," he explained. "The medium-term outlook for our economy does remain strong."

Mr Swan added that second-quarter inflation had been largely fuelled by the impact of this year's floods and cyclones, which he claimed had also hampered economic growth during the opening three months of the year.

Last week, a report from Merrill Lynch indicated that urban dwellers were cutting back on credit card spending and saving money in an attempt to ride out regional economic difficulty.