The Australian Bureau of Statistics (ABS) has released the latest household spending data for the nation, suggesting that services inflation continues to rise while households reduce non-essential purchases.
Household spending has increased by 3.3 per cent on a current price, calendar-adjusted basis over the year.
- Household spending for services is up 7.2 per cent through the year
- Household spending for goods is down 0.9 per cent through the year
- Hotels, cafes and restaurants lead the way, up 7.8 per cent
- Transport follows at number two, up 7.7 per cent
- Miscellaneous goods and services come in third, boosted by 7.6 per cent
Interestingly, Western Australia is leading in household spending increases, with a 4.7 per cent rise, where transport is the highest at 13.9 per cent.
City Index Senior Market Analyst Matt Simpson said it appears that inflation is here to stay.
“Elevated levels of services inflation remains a key concern for the RBA, and today’s figures suggest it will remain elevated for a while,” he said.
Mr Simpson extrapolated that the new data could mean an RBA rate hike is not far away.
“A cutback of discretionary spending shows some caution among the masses but, on aggregate, household spending isn’t exactly screaming for the RBA to stop hiking.”
He also highlighted that the strong labour market implies further hiking.
The labour market will be closely monitored, with Morgan Stanley noting earlier this week that Australian workers are increasingly expecting to be unemployed in the near future, while consumer and business sentiment remains low.