The Australian Bureau of Statistics (ABS) Household Spending Indicator data for October showed a 1.6% month-on-month increase in nominal household spending, the highest growth since January 2024. The rolling annual growth rate accelerated to 5.6%, reaching its highest level since September 2023.
November data further indicated a 1.0% rise in household spending for the month and a 6.3% increase on a rolling annual basis, matching the strongest reading since September 2023.
Spending growth was observed across various categories and states, including New South Wales and South Australia, which both recorded 0.8% growth for the month.
The increase was not solely attributed to non-discretionary spending. Discretionary spending rose by 6.1% year-on-year, its strongest performance since June 2023. Non-discretionary spending increased by 6.7% over the last 12 months, its highest since September 2023.
While potential seasonal factors might influence December's data, the overall robust performance from recent months suggests possible pressure on the Reserve Bank of Australia (RBA) to consider raising interest rates.
However, when viewed through a per capita lens, nominal spending has cumulatively increased by 5.8% since January 2023. The consumer economy appears to be more reliant on population growth than on per capita consumption, with inflation-adjusted spending showing minimal change. Despite this, the current rate of population growth implies that interest rate increases remain a real possibility.