The proportion of Australians classifying themselves as poor has surged in the past 12 months as the rising cost of living erodes household budgets.
The percentage of people reporting some kind of financial hardship hit 37 per cent in 2022 compared to 31 per cent in 2021.
The uncertain economic climate is damaging social cohesion in Australia, putting the nation's post-pandemic recovery at risk, a Scanlon Foundation Research Institute report has found.
"Some warning signs in this year's data suggest a return to pre-pandemic normality is not inevitable," report author James O'Donnell said.
"As Australians navigate a difficult economic climate and grapple with new geopolitical challenges, we have reached a critical tipping point where we can either solidify and strengthen social cohesion, or allow it to slide further."
Financial troubles were dominating the Australian psyche, with economic issues raised by four out of 10 of people when asked "what's the biggest problem facing Australia today?"
Like most countries, Australia is experiencing sharply rising inflation - hitting 7.3 per cent in the September quarter - that has triggered aggressive interest rate hikes from the central bank.
This is putting pressure on consumers at the checkout as well as mortgage holders, with rising interest rates driving up monthly repayments.
While Australians are most concerned about a global economic downturn - with three out of four attaching some level of concern to this macro trend - Australia-China relations emerged as the second most prominent issue worrying people (74 per cent).
About 70 per cent of people were worried about climate change, 62 per cent were concerned about COVID and other pandemics and 54 per cent raised a military conflict involving Australia as a concern.
"This year's survey findings demonstrate Australia is not immune to global trends, with concern about social and economic inequalities having a significant impact on social cohesion in Australia in 2022," Dr O'Donnell said.
But some markers of social cohesion improved, including support for immigration and multiculturalism.
Since 2018, the proportion of people agreeing that "immigrants from many different countries makes Australia stronger" climbed from 63 per cent to 78 per cent.
"In a world in which immigration continues to be a source of social division, our population-wide support for multiculturalism and diversity is a great asset to Australia, potentially insulating us from deeper divisions," Dr O'Donnell said.