Shillong, September 4: Australia’s household spending has seen its first decline since February 2021, influenced by higher interest rates and inflation, according to official data released on Monday by the Australian Bureau of Statistics (ABS). The indicator recorded a 0.7% decrease compared to July of the previous year.
As per IANS, this overall drop in household spending was primarily driven by reduced expenditures on furnishings and household equipment, clothing and footwear, as well as recreation and culture.
Fresh data from the ABS also revealed a significant 4.1% decline in goods spending, the largest since July 2021, while spending on services increased by 2.4%.
The month of July witnessed a decrease in spending growth rates across all states and territories compared to the previous month.
Robert Ewing, Head of Business Statistics at ABS, highlighted that households have been scaling back their spending over the past year due to higher interest rates and inflation. Ewing noted, “Spending on discretionary goods and services has declined for the fourth consecutive month, falling by 3.3% over the year as households adapt to the cost of living pressures.” He also mentioned that non-discretionary spending increased by 1.7%, the lowest growth rate since early 2021.
Since May 2022, the Reserve Bank of Australia (RBA) has implemented 12 rate hikes, raising the cash rate target from 0.1% to 4.1%. With the current Consumer Price Index (CPI) at 6%, the RBA remains committed to achieving an inflation rate of 2-3% by further tightening its monetary policy.