"I never took too much notice before but in the last six months I am keeping an eye on these things a lot more. With a baby there are a lot of extra costs there, for sure. "We have a couple of friends who have had babies and that's been handy with helping us out, as a lot of the baby stuff is pretty expensive." Bridie, 33, an osteopath, says health insurance is a big cost for the couple and premiums have gone up a lot. The family has middle-level cover and Bridie gave birth in a public hospital. Living costs rise Australian Bureau of Statistics figures released last week suggest overall price rises were low during 2017, 1.9 per cent, but there were sharp rises in the prices of essentials such as electricity (which rose by 12.4 per cent over the year), hospital services (5.4 per cent) and secondary education (4.1 per cent).

Wage growth over the year was 2 per cent. And from April 1, health insurance costs rise by an average of 3.95 per cent. According to the Australian Institute of Petroleum, as reported by CommSec, the national average Australian price of unleaded petrol has risen 10 per cent over the final three months of 2017. And just for good measure, for many of us who went on a spending spree during the holiday period, the credit card bills are falling due. Comparison site RateCity estimates that about $28.6 billion of holiday period spending will fall due over the next few weeks. "Families are not only dealing with debt from the holidays, they're now racking up more expenses on their cards to pay for essential back-to-school items," says RateCity money editor Sally Tindall.

"Most people have between 45 and 55 interest free days, but once they dry up, people get hit with interest rates as high as 24.99 per cent." And four out of five credit card holders rely on plastic to pay for day-to-day necessities such as groceries and bills, according to a survey of 1003 people conducted by comparison site Mozo. The survey suggests one in five credit cardholders are being saddled with long-term debt of three years in more. While there are improvements in measures of financial comfort because unemployment is low, that is offset by a fall in comfort with living expenses. "Households' comfort with paying their monthly living expenses fell 3 [percentage points] to 6.4 out of 10 during the six months to December 2017, the lowest it's been since mid-2014," says Jeff Oughton, consulting economist and co-author of ME Bank's latest Household Financial Comfort Index.

Financial comfort worsens "In fact, ME's latest report shows many households' financial situation is getting worse and again the culprit is living expenses, with 40 per cent reporting this as a key reason their situation is worsening. "Around 46 per cent of households surveyed also cited the cost of necessities such as fuel, utilities and groceries as their biggest worry," Oughton says. ME's report finds a high level of stress in paying the mortgage or the rent. More than 70 per cent of renters are spending 30 per cent or more of their disposable income on rent and 46 per cent of those paying off a mortgage are putting 30 per cent or more of their disposable income towards this.

Paying more than 30 per cent of disposable income is a common indicator of financial stress, Oughton says. "Seven per cent of households reported they could not always pay their mortgage on time during the past year and 7 per cent could not pay their rent on time," Oughton says. "Mortgage defaults may escalate if interest rates increase, particularly among vulnerable low-income households already dealing with the rising cost of necessities," he says. However, there is one household group bucking the trend. "Households under 35 years old without children – commonly dubbed the 'avocado generation' − many of whom have benefited from improved employment conditions without the burden of childcare costs or potentially a mortgage, are not as worried.

"Their financial comfort rose by 8 per cent, and their comfort with living expenses increased 2 per cent during 2017," Oughton says. Meanwhile, bankruptcies increase More than 32,000 Australians went bankrupt in 2017 – a 6.1 per cent year-on-year increase, according to an analysis of bankruptcy figure by Illion, the recently renamed Dun & Bradstreet credit reporting agency. The rise follows a 4.7 per cent year-on-year hike recorded in 2016. "Consumer debt levels are rising steadily in Australia as a result of record mortgages and a surge in everyday essentials such as utilities, petrol and healthcare," says Illion's chief executive Simon Bligh.

"These factors, combined with weak wage growth, are putting pressure on the wallets of Australians." Bligh says we've seen the end of the improvement cycle in bankruptcies and we are now seeing the start of the deterioration; it is not dramatic, but it is nationwide wide. "We are seeing strong growth in pay-day loans," often an early indicator of trouble in getting behind in paying the utility bills, Bligh says. That is even more so given that energy bills have jumped so much. People should also shop around for a better deal on credit and not just go to their bank, he says. Loading

In some good news, the relatively low inflation during 2017, overall, despite the sharp price hikes of some essential services, means there is little chance of an imminent Reserve Bank interest rate hike and the knock-on effects for mortgage interest rates, says Shane Oliver, the chief economist at AMP Capital Investors. The headline and underlying inflation is still below the Reserve Bank's inflation target of 2-3 per cent and is expected to remain there for a while yet, Oliver says.