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Household spending rose 0.2 per cent in September, Australian Bureau of Statistics figures show. This followed a revised flat result in August and a 0.4 per cent rise in July. Household spending is now up 5.1 per cent for the year, outstripping the inflation rate of 2.7 per cent. AMP economist My Bui said household spending was still sluggish and underwhelming. “Overall, household spending is still better than where it was last year, but today’s data shows that the recovery in household sector remains very fragile, which is consistent with the recent stagnation in consumer confidence,” she said. ABS head of business statistics Tom Lay said the spending increase was mainly driven by staples including food, health and petrol, which rose by 1.8 per cent over the month. This leads to concerns about how far the family budget can stretch and what is going to be sacrificed to pay for these essentials. Meanwhile, discretionary spending was flat for September, with higher spending on recreation and culture activities being offset by falls for air travel and accommodation. Oxford Economics head of economic research and global trade Harry Murphy Cruise told NewsWire that spending increases were not occurring in the “nice to haves”. “That shift in spending from discretionary to essentials is noteworthy, as it is much harder to pull back on your non-discretionary spending” he said. Despite the slowdown in growth over the last quarter, Mr Murphy Cruise said there was still a long-term uplift. “The fact we have spending at a fairly solid pace suggests households still have a genuine appetite to spend,” he said. “This is yet another reason for the RBA to keep rates steady tomorrow.” Mr Murphy Cruise also said consumer spending could be stronger than the figures showed, as the ABS called out a strong fall in alcoholic beverages and tobacco sales. “The surge in black-market tobacco sales in recent years has artificially dragged measured spending lower – as consumers shift from legal to illegal purchases, recorded spending falls even though total outlays on tobacco haven’t changed,” he said. “Adjusting for this, household spending volumes rose 0.4 per cent in the quarter – twice the headline pace.”
