Household spending unexpectedly lifts 1.3% in October
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The news: Australian household spending lifted 1.3% in October, ahead of market expectations for a 0.6% increase, marking the highest monthly increase since January 2024.
The numbers: The monthly household spending indicator lifted 5.6% compared to October 2024. Household spending had lifted 0.3% month on month in September and 5.1% year on year.
In October 2025, goods spending lifted 1.7% compared to September and services spending lifted 0.8%.
Discretionary spending lifted 1.6% month on month in October, at a greater pace than the 0.1% increase in September. The non-discretionary spending increase of 0.8% month on month was constant.
All nine categories saw spending rise, led by clothing and footwear (+3.5%), furnishings and household equipment (+3%) and hotels, cafes and restaurants (+2.2%).
The context: The higher than expected household demand was driven by a surge in discretionary spending on goods. ABS head of business statistics Tom Lay said “promotional events saw households spend more on clothing, footwear, furnishings and electronics following months of weaker spending in these categories”.
Lay also flagged that services spending was driven by major concerts and cultural festivals which “drove up demand for catering, hospitality and hotel stays in major cities”.
However, ANZ economists flagged in a research note that the trend is “unlikely to be repeated next month” as an earlier start to promotions pulled some spending forward from November.
Commonwealth Bank senior economist Ashwin Clarke however flagged that “this print will likely add to the nervousness of the RBA heading into its December meeting and into the December quarter CPI print”.
Clarke flagged that “even if the monthly growth rates record very weak growth for the remainder of the quarter, household spending will still be strong over the December quarter”, which could create the conditions for businesses to pass on elevated price increases.
Some economists have been warning the Australian economy is nearing its capacity limits, which could add inflationary pressures and put interest rate increases on the table in early 2026.
The sources: ABS media release, ABS data, ANZ research, Commonwealth Bank research
