By Cameron Micallef,Cameron Micallefnew

Copyright thewest

Australian households are responding well to interest rate cuts and real wage rises, with airline travel and accommodation services continuing to boost household spending.

Fresh figures from the Australian Bureau of Statistics showed spending rose 0.1 per cent in the month of August.

This follows a 0.4 per cent rise in July and 0.5 per cent lift in June.

Household spending is now up 5 per cent over the last 12 months compared with the prior corresponding period.

The small rise in August was the fourth increase in a row, and spending has risen in 10 of the last 12 months, ABS head of business statistics Lauren Binns said.

Households spent more on booking airline travel and accommodation services during August. This contributed to a 0.5 per cent rise in spending on services.

Spending on goods fell 0.2 per cent over the same period.

While the Reserve Bank of Australia held interest rates after its September meeting on Tuesday, it has cut rates three times in the last nine months.

This included further interest rate relief in August.

Deloitte Access Economics partner Stephen Smith said prior to Thursday’s data being released that interest rate cuts have been pivotal to lifting household spending.

“A single 25 basis point interest rate cut is worth nearly $1,700 a year for the average new borrower.

“We expect real household spending growth to improve from the 1.0 per cent recorded in the 2024-25 financial year to around 2.5 per cent in both 2025-26 and 2026-27, comfortably faster than broader economic growth in those two years,” he said.