25 February, 2024
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Household spending jumps again in June

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Household spending rose 10.2 per cent in June compared to the same time last year, new figures show.

The Australian Bureau of Statistics reported on Tuesday it was the 16th consecutive month of through-the-year increases in total household spending.

“Spending categories most impacted from COVID-19 responses (transport, hotels, cafes and restaurants, and clothing and footwear) have now returned to pre-pandemic levels,” ABS head of macroeconomics statistics Jacqui Vitas said.

Transport spending increased by 22.7 per cent, driven by higher petrol prices and demand for air travel.

Strong growth was also seen in spending on hotels, cafes and restaurants (up 17.1 per cent), clothing and footwear (up 16.3 per cent) and recreation and culture (up 15.5 per cent).

Health (0.8 per cent), alcoholic beverages and tobacco (up 0.9 per cent) and food (up 1.8 per cent) recorded only moderate rises.

The figures don’t take into account the impact of the Reserve Bank’s latest interest rate hikes, with the central bank taking the cash rate to 1.85 per cent in August in a bid to get inflation under control.

However, consumer sentiment has soured with a ANZ-Roy Morgan survey finding confidence dropped 4.5 per cent last week.

The sub-index for current financial conditions dropped 1.9 per cent, while the index for future financial conditions was down 5.5 per cent.

The Westpac Melbourne Institute consumer sentiment index released on Tuesday also fell, indicating confidence was down 22.9 per cent since November 2021.

Westpac chief economist Bill Evans said the reading was on par with the lows from during the global financial crisis and COVID-induced downturn.

The survey showed 58 per cent of respondents expected the cash to increase by one percentage point or more over the year following the latest increase in August.

Westpac expects the cash rate to rise by a further 1.5 percentage points by February 2023.

The NAB Monthly Business Survey, also released on Tuesday, found business confidence rose back above average and conditions strengthened in July.

Chief economist Alan Oster said the bounce was “something of a surprise” after a steady decline in previous months.

“Inflation and rising interest rates are clouding the outlook, and there are growing concerns about the global economy, but businesses seem to have a fairly positive outlook at the moment,” he said.

Overall, the survey suggested that despite global and domestic economic headwinds, demand has remained strong but inflationary pressure continues to build suggesting that inflation is yet to peak.

The ABS also reported on Tuesday business turnover had increased in eight of 13 selected industries in June.

Electricity, gas, water and waste services was the industry with the largest percentage growth in business turnover for the second consecutive month.

– AAP

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