Australian household spending was modest at the start of the year, with a 0.3% rise in February matching January's gain. This came ahead of the fuel price shock, while back-to-back hikes from the RBA will be a further headwind for consumers. Spending rose at 4.6% pace through the past 12 months, with growth in discretionary (4.6%) and non-discretionary categories (4.6%) running neck and neck.
Household spending was up by 0.3% through the first two months of the year, largely ahead of the headwinds the consumer now faces from the fuel price shock and the RBA's tightening cycle. In February, the 0.3% rise in spending was led by discretionary categories (0.5%), including recreation and culture (1.1%) and hotels, cafes and restaurants (0.4%). Spending in essential or non-discretionary areas was flat (0%): spending increased on food (1%) and health (0.2%) but fell in transport (-0.4%). Higher fuel prices will show up in a significant increase in transport spending from March, but the main interest will be around the impacts this has on other categories.
Spending across services rose 0.5% on the month, outperforming goods (0.1%). This trend has also been evident over the past year with services (6.2%) dominating goods (3.1%). However, one factor that has dragged on goods has been alcohol and tobacco (-12.2%), associated with the rise in illicit tobacco sales the ABS has been unable to account for.
