August 8: Discretionary Spending Down For Third Straight Month
Financial Planning

August 8: Discretionary Spending Down For Third Straight Month

Interest rate hikes and high inflation are prompting consumers to shut their wallets, with the latest figures from the ABS showing household spending grew by 1.8% in June compared to the same time last year.

As the ABS noted, this was the smallest increase in household spending since February 2021.

Contributing to the modest growth in household spending was goods and services, which grew by 8.4% and includes spending on child care, legal services and personal care. Health spending was up by 6.2%, followed by food, which rose by 5%.

According to the ABS, non-discretionary spending rose 4.2%, driven by outlay on food, health, and catering services. In contrast, discretionary spending fell 0.7%—the third decline in as many months—as consumers cut back on clothing and footwear, goods for recreation and culture and furniture, floor coverings and household items.

The data came as Myer, Australia’s biggest department store, revealed that sales had grown by a meagre 0.4% in the June half. The news followed double-digit growth in the December half, and points to the cumulative effect of successive interest rate hikes on consumers with many borrowers coming off fixed rate mortgages in the first half of this year.

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