Aussies spending less on non-essential items as cost of living pressures bite

Australians are spending much less on gadgets for his or her houses and clothes with the newest family spending information revealing the impression of consecutive rate of interest hikes and value of dwelling pressures.

Australian Bureau of Statistics (ABS) information revealed family spending on discretionary items and providers – which means non-essential gadgets – was 0.6 per cent decrease in comparison with May final 12 months.

“Driving the fall in discretionary spending over the year was 4.8 per cent less spending on furnishings and household equipment, and 3.4 per cent less on clothing and footwear,” ABS head of business indicators Robert Ewing mentioned.

make money from inflation — Discretionary spending has dropped prior to now 12 months however spending on important gadgets like meals has elevated. (Getty Images/iStockphoto)

“While overall household spending rose 3.3 per cent in May compared to the same time last year, it was the lowest growth rate since July 2021.

“This comes as households reply to cost-of-living pressures.”

Overall, household spending increased by 3.3 per cent compared to May last year and was predominantly driven by spending at hotels, cafes and restaurants as well as transport.

Spending on food was also a key contributor to the rise in non-discretionary household spending – a rise of 5.8 per cent nationally – as inflation bites the grocery budget.

The May month-to-month inflation information confirmed a 7.9 per cent rise in meals costs.

Household spending increased in all states in the past year but Western Australia recorded the largest increase led by rises in transport and health.

The Northern Territory recorded the smallest rise in household spending in the past year.

In the July decision, Governor Philip Lowe noted how high interest rates and cost of living pressures “is resulting in a considerable slowing in family spending”.

“Some households have substantial financial savings buffers, others are experiencing a painful squeeze on their funds,” he said.

Consumer price index – otherwise known as inflation – and household spending are two key data drivers for the RBA’s decision-making in regard to interest rates.

But bringing inflation to the target of 2 to 3 per cent is the bank’s central goal and it flagged future rate rises are possible.