Australians Cut Back on Spending as Inflation Bites
Australians are tightening their belts as the cost of living continues to rise. New data from the Australian Bureau of Statistics (ABS) shows that household spending fell by 0.5% in June, after two consecutive months of increases.
The decline was driven by a drop in spending on discretionary items such as events, accommodation, and food. Spending on services fell by 1.8%, with Australians cutting back on recreational activities, hotel stays, and eating out.
However, there was a slight increase in spending on goods, as households took advantage of end-of-financial-year sales. This 0.5% rise partially offset the decline in services spending.
Despite the overall decrease in June, household spending has increased in volume terms in six out of the nine categories tracked by the ABS throughout the year. The largest increases were in furnishing and household equipment, miscellaneous goods and services, and health.
Compared to the same time last year, all states and territories have seen a rise in spending. Western Australia and Queensland recorded the largest increases. However, there has been a significant decrease in spending on alcohol and tobacco, down 12.8% compared to last year.
The rising cost of living is putting pressure on Australian households, and further interest rate rises could exacerbate the situation. The Reserve Bank of Australia is due to announce its decision on interest rates on Tuesday, and the Australian Council of Social Service has cautioned against further increases, fearing they could harm jobs and incomes.