Household spending falls for first time since early 2021: ABS

The news: Household spending was 0.7% lower in July than the same month a year earlier, as higher costs continue to bite at household budgets, ABS figures show. It's the first time the spending indicator has fallen since February 2021.

The numbers: Discretionary spending was down for the fourth straight month, dropping 3.3% over the year, while non-discretionary spending rose 1.7% — the lowest rate of increase since early 2021. Goods spending was down 4.1% on July 2022, as services spending lifted 2.4%. Spending on furnishings and household equipment fell 7.9%, while clothing and footwear spending dropped 7.5%. Spending growth rates in all states and territories were lower in July than the month before.

The context: Spending growth has been trending downward since August 2022 as inflation, and the interest rate hikes employed to control it, have reduced households' spending capacity. The Reserve Bank board is expected keep the cash rate target unchanged at 4.10% tomorrow. It will be Philip Lowe's last interest rate meeting as RBA governor.