High debt, weak wages growth and fragile sentiment are driving up the level of financial stress among consumers.

Australians are under more financial stress as the cost of living goes up, and wages don’t rise as much.

Credit information supplier Dun & Bradstreet says consumers are feeling the strain of high household debt, weak wages growth and fragile sentiment.

The level of Dun & Bradstreet’s consumer financial stress index is expected to reach 25.3 points by the end of September.

That level is up from 18.4 points in the June quarter and is the second highest level in four-and-a-half years.

“The rising index is concerning, but not surprising, given that inflation is now outstripping wages growth,” said Dun & Bradstreet’s director of consumer risk solutions, Steve Brown.

“What’s particularly worrying is that this rising stress is coming at a time when we have very low interest rates and a relatively steady jobs market.”

Mr Brown said the level of consumer financial stress contrasted with relatively stable and positive business confidence.

If consumers continued to feel increased financial stress into the December quarter, spending during the important Christmas trading period could be constrained, which in turn may affect business confidence.

Mr Brown said it was well known that Australians carried a large level of personal debt, but most of that was related to investment in housing, which was generally viewed as positive.

Nonetheless, if individuals were highly geared, hefty mortgages could impinge upon their discretionary spending.

Mr Brown said it was important that inflation did not outstrip wages growth for a sustained period even though wages restraint could be beneficial for the economy.

“I think governments will certainly need to make sure they are playing their part to ensure that households aren’t exposed to increased costs, and certainly things like energy are something where the government should be able to play a role,” he said.

Queenslanders were found to be under the most stress.

Personal debt agreements, a precursor to bankruptcy, in Queensland had jumped 33 per cent in the second quarter of the year compared to one year earlier.

Personal insolvency activity in Queensland was also the nation’s second highest.

Mr Brown said Queenslanders may be feeling greater financial stress because of the impact of the high Australian dollar on the state’s agricultural exports sector.

Financial stress eased in NSW and Victoria in the second quarter as local economies benefited from strong population growth, construction activity and new jobs.

For the third quarter, financial stress is expected to increase in all states and territories.