Household spending growth at lowest since February 2021

The news: Overall household spending was up 1.8% year on year in June, the smallest growth in the figure since February 2021, according to new ABS data. Discretionary spending fell for a third straight month as the cost of living continued to rise.

The numbers: The overall growth in spending compared to June 2022 was driven by an 8.4% lift in miscellaneous goods and services spending, which includes childcare, legal services and personal care. Spending growth on health (6.2%) and food (5%) also lifted significantly. Goods spending fell 1.25% in June, the biggest drop since July 2021, while expenditure on services rose 4.6%.

The context: Inflation has fallen from its December peak of 7.8%, but remains high at 6% for the year to June 2023, as RBA rate hikes slowly make their way through the economy. The rate rises are also taking a toll on households with mortgages, putting further pressure on spending.