Household expenses increased for essentials like groceries and healthcare last month, while overall spending saw a decrease, indicating a cautious consumer sentiment.
The Australian Bureau of Statistics (ABS) reported a 0.1 percent drop in the household spending indicator in September.
Expenditure on new clothing and footwear decreased by 1.8 percent, reversing the previous month’s gain of the same magnitude.
Robert Ewing, Head of Business Statistics at ABS, noted a 0.6 percent decline in transport spending, influenced by lower petrol prices and reduced spending on new vehicles.
“Increases in essential categories such as food and healthcare, which saw a rise of 0.5 percent and 0.6 percent respectively, helped offset these declines,” he explained.
Despite tax cuts and cost-of-living relief boosting household incomes since July, the indicator reflects a subdued consumer outlook.
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Commonwealth Bank economist Gareth Aird commented that the household spending indicator provided a more negative insight into consumer response to tax cuts compared to retail trade numbers from Oct. 31.
“Various indicators of consumer spending indicate a lackluster response from households to the income boost from tax cuts,” Aird stated.
The household spending indicator covers a broader range of categories than the retail trade survey and accounts for most expenditure in the national accounts.
“The data has shown weakness over the past three months, surprisingly soft,” he added.
Although consumer confidence levels have shown signs of improvement, with ANZ and Roy Morgan’s weekly measure gradually rising and respondents expressing optimism about their financial future.
Consumer spending patterns are being closely monitored, as a significant increase in expenditure could pose challenges in the fight against inflation.
The Reserve Bank of Australia (RBA) is expected to maintain interest rates at its upcoming meeting, despite headline inflation returning to target levels.
With persistent underlying inflation and a robust labor market, the central bank is likely to proceed cautiously and await further data before considering any rate cuts.
On Nov. 1, the statistics bureau also released data on input prices across various sectors.
Residential building construction prices saw a 0.9 percent increase in the quarter, attributed to a tight labor market.
Childcare services prices rose by 0.7 percent due to annual fee adjustments reflecting wage increases and rising operating costs.
