Australian household spending rose modestly to start 2026 lifting by 0.3% in January, slightly below the expected 0.4% increase. This was a rebound from a 0.5% decline in December (-0.5%) after the Black Friday sales and major events pulled spending forward into November (1%). Spending was up 4.6% over the year but is set to face headwinds from here with the RBA hiking and from renewed cost-of-living pressures.
The household spending indicator (a high frequency measure of bank card spending) rose by 0.3% in January and 4.6% over the year. The key area of growth was in services categories (1%) - mainly in essential areas - as spending across goods declined (-0.3%) after also falling in the prior month (-0.8%).
Growth in spending in January was driven largely by health (1.7%) and 'other goods' (which includes personal effects such as pharmaceuticals) (2.5%). Transportation (including air travel) (0.3%) was another key support. Those gains were moderated by declines across several categories. The largest of those was in alcohol and tobacco (-1.7%), though the statistician is known to be having trouble accounting for tobacco given the rise in illicit sales. Meanwhile, falls were also recorded in hotels, cafes and restaurants (-0.6%) and furnishings and household equipment (-0.7%) - both discretionary-related areas.
