In its Business Outlook report, Deloitte said there were at least 300,000 Australians experiencing negative cash flow as mortgages and rents and essential expenses exceeded income.

“That should be a shock to us all,” Deloitte partner and author or the report Stephen Smith said.

The company has revised down its economic growth forecast from 1.5 per cent to 1.2 per cent. The RBA forecast is for 1.5 per cent and the International Monetary Fund expects 1.6 per cent.

However, Queensland and WA were relative bright spots in the economy because of mining exports.

Smith said that the RBA had tempted fate with the two increases and Australia was facing the weakest rate of economic growth outside the pandemic since the recession of the early 1990s.

Smith said the hikes earlier this year had prompted a further downgrade of Australia’s economic growth outlook.

“That downgrade has centred on our households and a consumer recession is now forecast in 2023 with household spending expected to finish the year below where it started,” Smith said.

“At a cash rate of 3.6 per cent, most Australians will be just fine. Many, however, will not.

“In just 10 months, the cost of servicing an average $600,000 mortgage will have risen by $14,000 a year once those rate hikes are fully passed through.

“But that is just the average and there are plenty of mortgage holders on either side of those numbers.”

A key issue was housing and Deloitte said new supply would barely keep pace with population growth.

Smith said Australian industry output would increasingly reflect slowing global and domestic economic conditions, including the effects of weaker household spending.

“Some sectors of the economy are better positioned to face the slowdown than others, with retail and construction forecast to feel the pinch, while agriculture may pull back after recent highs,” he said.