Australian Household Spending Rises Just 0.1 Percent in August

Household spending in Australia increased by only 0.1 percent in August, marking a sharp deceleration. This figure signals a broad-based slowdown in consumer activity across the economy.

The latest CommBank Household Spending Insights reveal that five of twelve categories recorded monthly gains. Conversely, an equal number of categories saw declines, indicating mixed consumer behavior.

Essential costs drive recent spending gains

Transport, insurance, and health services posted the strongest increases among all tracked categories. These essential expenses remain unavoidable for most households regardless of economic conditions.

Education, motor vehicles, and food goods recorded the largest declines in August. This pattern suggests consumers are prioritizing core needs over discretionary purchases.

Inflation pressures continue to squeeze budgets

Slower income growth and lower housing prices are reducing the wealth effect on spending. These factors are expected to maintain downward pressure on consumer outlays.

CommBank economist Belinda Allen noted that households are devoting a larger share of income to fuel. Inflation remains too high, forcing families to allocate more budget to essential costs.

Rate hike risks impact mortgage holders

CommBank expects the RBA to raise the cash rate by 25 basis points to 4.60 percent. This decision is scheduled for the meeting on September 28 and 29.

A further increase would raise mortgage payments for households that kept rates fixed after 2025 cuts. This move will strain family budgets already dealing with high inflation.