Growth in household expenditure slows, with services continuing to lead gains
Household spending in Australia edged up by 0.1% in August, according to seasonally adjusted data released by the Australian Bureau of Statistics (ABS).
The slight increase follows larger increases of 0.4% in July and 0.5% in June, marking the fourth consecutive monthly rise.
“The small rise in August was the fourth increase in a row, and spending has risen in 10 of the last 12 months,” said Lauren Binns, head of ABS business statistics. “Through the year, growth remained elevated. Household spending was 5% higher than the same time last year.”
The latest ABS figures on household spending show that households increased their expenditure on airline travel and accommodation, contributing to a 0.5% rise in services spending. In contrast, spending on goods declined by 0.2%. Five out of nine spending categories saw increases during August, led by transport and miscellaneous goods and services, both up by 0.8%. The most significant declines were observed in recreation and culture, and alcoholic beverages and tobacco, each falling by 0.9%.
On an annual basis, miscellaneous goods and services grew by 8.9%, while health spending rose by 8.0% over the 12 months to August. Services spending was 8.1% higher than in August 2024, compared to a 2.5% increase for goods.
Growth in household spending was recorded in five of the eight states and territories. The Australian Capital Territory posted the largest monthly increase at 2.9%, followed by Tasmania at 0.6%. The Northern Territory experienced the sharpest fall, down 1.2%.
Ivan Colhoun, chief economist at CreditorWatch, said he remains convinced that the household spending indicator (HSI) has picked up as much as the RBA and many market economists are currently assessing.
“There was some support for my contention in the slightly weaker than expected August HSI data, though extremely wet weather in NSW complicates this assessment,” Colhoun said. “The higher-than-expected August monthly CPI, which RBA governor Bullock confirmed included disappointing information about market services inflation, is evident in the relative strength of services spending over goods spending.
“More importantly, that higher CPI print will likely constrain the RBA from easing further until there is greater clarity on the extent of the pick-up in consumer spending – the September HSI will be important.
“The economy is performing OK, but it remains the case that a little less restrictive monetary policy, would be helpful and will likely be delivered in time.”
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