Soaring living costs: Which ASX companies are making a difference in Aussies’ financial struggles?
From supermarket shelves to the petrol bowser, rising rents and mortgages, electricity and other essential goods and services, Australia is in the grip of what has largely been termed a “cost of living crisis”.
The Reserve Bank of Australia (RBA) has jacked up interest rates 13 times since May 2022, in its most aggressive monetary policy in decades as it works to contain stubbornly high inflation, which peaked at 7.8% in December 2022.
Hikes followed cuts which saw the cash rate at a record of low of 0.1% in November 2020 – where it remained until the RBA kicked off its hawkish cycle. At the time of record low interest rates the central bank was trying to prop up the Aussie economy struggling from the Covid-19 pandemic.
While Australia’s CPI inflation rate for the December quarter fell to a two year low of 4.1% from 5.5% in the September quarter, it remains still above the RBA’s target of 2-3%.
And just because the inflation rate is falling doesn’t mean that prices are falling but rather just rising less quickly than previous months.
At its meeting this week the RBA kept rates on hold but emphasised in its post-meeting statement that while recent data indicates inflation is easing, it remains high. In other words don’t put your money on interest rate cuts just yet.
“The board expects that it will be some time yet before inflation is sustainably in the target range,” the RBA says.
“The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks, and a further increase in interest rates cannot be ruled out.”
So with costs of living remaining high we thought we’d look at some of the ASX stocks helping Aussies to ease the pressure.
Consumer lender WZR sees financial wellness, which is defined as a relative measure of how well a person manages their financial life, as so important it has centred its entire business around the concept.
The company has chosen to develop two platforms, one for digital lending and the other for financial wellness, which is aimed at improving its customers’ financial health and wellbeing.
CEO Andrew Goodwin told Stockhead their technology can help people stick to a budget through automation and working in the background.
“Just like tossing your coins in a jar, you can put your digital spare change to work by rounding up your daily purchases with the Wisr App,” he says.
“This app rounds up your purchases to the nearest dollar, putting the difference aside to pay down your debt or bolster your savings.
Goodwin says essential transactions, such as fuel and groceries, could help you save hundreds of dollars every year without lifting a finger.
“Our competitive advantage, a purpose-built business model that can help improve financial health and goes far beyond the traditional lending experience, has never been more relevant as rising interest rates and other cost-of-living pressures create a financial strain for more Australians,” he says.
Goodwin says WZR customers can also get instant insights on their credit scores and be alerted as soon as they change – helping them to understand their financial health position.
“They can upskill and improve their financial knowledge with Smart Moves, and if they have a Wisr loan, they can make one-off payments, change their payment frequency to help with the pay cycle or allocate their round-up change to their loan, helping to pay down faster,” he says.
“Financial health is about education, empowerment, and understanding your options, choices, and what you can do depending on your objectives and we’ve put it together in one free app.”
The digital lender’s core products are variable rate personal loans, secured car loans, and credit cards.
MME last year became one of just 15 financial providers in Australia to gain B Corp certification, granted to companies upholding the highest standards of responsibility concerning their environmental and societal impact.
As part of its financial wellness offering, MME offers debt consolidation, helping customers roll existing debts into a low-rate personal loan, and a free credit score tool, which allows users to check their score and learn about the factors moving their score up or down.
MME’s credit score tool has attracted more than 95,000 users since its launch in FY23. In addition to personalised credit score insights users can see what’s listed on their credit report, including credit enquiries and negative credit events such as missed payments.
Chief operating and product officer Jonathan Wu told Stockhead amidst the ongoing cost of living crisis and persistent high interest rates, that many Australians undoubtedly feel financial strain and taking proactive steps to manage existing debt can go a long way towards alleviating some of this pressure.
“A good starting point is reviewing existing debts and exploring avenues for smarter debt management,” he says.
Wu says making additional repayments, especially towards overdue debts and those with high interest rates, can significantly reduce interest costs over time.
“It’s important to note that all loans come with interest, however, a debt consolidation loan often lowers the overall cost, especially for those with multiple loans, credit cards or BNPL accounts featuring high interest rates or fees,” he says.
“Transparency and flexibility are key for us, so customers can check their interest rate and repayments before they submit their application.
“We also don’t charge any early repayment fees, which means customers can pay off their debt consolidation loan sooner if they wish.”
He says a personal loan can sometimes be used in case of an emergency or an unexpected expense, and debt consolidation can also make debt repayments easier to manage in these circumstances.
“At MONEYME, we believe knowledge plays a crucial role in making sound financial decisions so by providing access to tools and resources, we aim to help our customers manage their finances more effectively,” Wu says.
“Our free credit score tool provides customers with insights into the factors influencing their score and how to improve it.
“A healthy credit score not only opens doors to better loan offers but also proves valuable when exploring options for refinancing existing debt.”
Established in 2014 and listing on the ASX in 2020, the fintech offers what it terms as “faster, fairer loans” by leveraging its smart technology. PLT’s loans span automotive, renewable energy, and personal for “creditworthy borrowers.”
In November PLT announced it had struck a deal with National Australia Bank, seeing the launch of a “NAB powered by Plenti” car and electric vehicle (EV) loan and then making PLT renewable energy finance available to NAB customers.
Under the deal, PLT’s household renewable energy finance solutions are also being made available to NAB’s customers, which aims to help Australian households save on energy bills and reduce carbon emissions.
The Big Four banks and PLT also entered into an equity investment agreement under which NAB may acquire up to 15% of PLT’s share capital through placements and market purchases.
CEO Daniel Foggo told Stockhead replacing credit cards with high interest rates with a lower rate personal loan may also help people save money.
“With higher interest rates, credit card interest rates are now commonly above 20%,” he says.
“If consumers aren’t paying off their credit card each month, Plenti might be able to help by converting credit card balances into a lower-cost personal loan”.
Foggo says when budgets are being squeezed, it also makes sense to ensure your savings are working hard.
“Plenti also offers an easy to access fixed income investment option, which allows investors to earn up to 9.5% per annum,” he says.
“Australian consumers now have many options when it comes to obtaining car and personal loans, so it makes sense to shop around when thinking about applying for a loan.
“Loyalty to a single financial institution is old-fashioned and probably comes at a cost – consumers should look for a competitive rate and compare loan features”.
At Stockhead we tell it like it is. While Wisr and MoneyMe are Stockhead advertisers, they did not sponsor this article.