- Telephone
- Email
Australian households are spending on wants again. In Trend terms, discretionary spending was up 7.0% over the year to August, against 5.2% for non-discretionary spending. Discretionary growth first moved ahead in March. Setting aside the lockdown and reopening swings of 2020 to 2023, that has not happened since 2018. Total household spending rose 6.3%.
The turnaround is where the story lives. In May 2024 discretionary growth was trailing essentials by 3.9 ppts, the widest gap of the cost-of-living squeeze. It now leads by 1.8 ppts. Households have gone from protecting the essentials to spending on the things they want.
And Queensland is leading the way again. Trend spending is up 6.7%, against 6.3% nationally, with discretionary spending up 7.5% and non-discretionary up 5.3%, a gap of 2.1 ppts. Recreation and culture (up 8.5%) and transport (up 8.4%) did the most work, and discretionary categories account for 4.8 of the 6.7 ppts of growth. But the lead over the nation is thinner than it looks on first glance. Brisbane prices rose 3.7% in the year to July against 3.5% nationally, and Queensland’s population is growing faster. In real terms, June quarter spending was up 2.8% here against 2.4% nationally.
Does this mean the cost-of-living crisis is over? No. These are nominal current price dollar figures rather than volumes, and the indicator does not include data on rent, electricity or insurance, which is where much of the cost-of-living pressure has been. ‘Non-discretionary’ here means mostly food, health and fuel. The indicator covers about two thirds of household spending, and the missing third is the part most households would call the cost-of-living. What it does show is that, across the spending it can measure, the squeeze has lifted.
And that conclusion matters this afternoon when the RBA Board sit down to think about what to do with rates. Spending growing at more than 6% in dollar terms while monthly CPI inflation runs at 3.5% is not a picture of demand cooling. A rate rise from 4.35% is widely expected at 2:30pm, and if it comes, this is a large part of the reason. The August monthly CPI follows tomorrow.
We are proud to have CBC Staff Selection as supporters of the Conus/CBC Staff Selection Trend Employment and Jobseeker data series