Fresh ABS data shows unexpected shift in Aussie spending habits

New figures from the Australian Bureau of Statistics (ABS) show Australians are spending more liberally, particularly on travel and accommodation. While this points to easing cost-of-living pressures, it may also slow down the Reserve Bank of Australia’s (RBA) path to delivering further interest rate cuts.

Spending lifts again in August

Household spending rose 0.1 per cent in August, following a 0.4 per cent rise in July and a 0.5 per cent lift in June, according to the ABS.

Australians spent more on airline travel and accommodation, which helped drive a 0.5 per cent increase in services-related expenses, while spending on goods slipped 0.2 per cent over the same period.

ABS head of business statistics Lauren Binns said the increase marked the fourth consecutive monthly rise, with spending higher in 10 of the last 12 months.

Expert views on household spending

Oxford Economics head of economic research and global trade Harry Murphy Cruise warned that the latest spending boom could delay further interest rate cuts.

“If household spending continues to pick up faster than expected, the extra spending could keep upward pressure on prices and slow the pace of rate cuts,” he said.

He noted, however, that the lift may partly reflect retailer discounts and back-to-back public holidays, rather than a full recovery in consumer appetite.

Despite the modest rise in August, household spending remains 5 per cent higher than a year ago.

What it means for interest rates

The RBA left rates on hold in September, after delivering three cuts in the last nine months, including in August. But this latest data suggests policymakers will remain cautious.

Deloitte Access Economics partner Stephen Smith said interest-rate cuts have been pivotal in boosting spending.

“A single 25 basis point cut is worth nearly $1700 a year for the average new borrower,” he said.

Deloitte expects real household spending growth to improve from 1.0% in 2024–25 to around 2.5% in both 2025–26 and 2026–27, comfortably outpacing broader economic growth.

Key takeaway

While Australians appear to be spending more freely on travel and lifestyle services, the RBA will be closely watching whether this trend fuels inflation. The balance between consumer recovery and price stability will be key in shaping the path of future rate cuts.

For more insights, explore our coverage on RBA interest rate decisions and cost-of-living updates.