Cost of living pressures laid bare in ABS household spending report

New data shows Australian households spent more in the year to May, but held back on discretionary items.

Australians battling the cost of living crisis are cutting back on non-essentials - especially furniture and clothes.

The Australian Bureau of Statistics (ABS) monthly household spending indicator report, released Tuesday, shows overall household spending was up 3.3 per cent in May, compared to the same time last year.

The latest ABS monthly household spending report shows Australians are spending more on food, due to an increase in food prices in the year to May. Picture: NCA NewsWire / Flavio Brancaleone

But it’s also the slowest growth rate since July 2021, and discretionary spending was down 0.6 per cent.

ABS head of business indicators Robert Ewing says it’s in response to increasing cost of living pressures.

“Driving the fall in discretionary spending over the year was 4.8 per cent less spending on furnishings and household equipment, and 3.4 per cent less on clothing and footwear,” Mr Ewing said.

The ABS monthly household spending indicator for the year to May showed overall household spending was up, but discretionary spending was down. Picture: ABS

This graph breaks down household spending by state; WA had the largest increase in household spending for the year to May. Picture: ABS

The overall household spending increase was driven by services; spending on hotels, cafes, and restaurants was up 7.8 per cent, and transport spending rose 7.7 per cent, accounting for an overall increase of 7.2 per cent in the services category.

Goods spending was down 0.9 per cent, but cash spent on food was the only increase (up 5.8 per cent) thanks to May’s CPI report showing the cost of food rose 7.9 per cent in the same period.

Western Australia recorded the largest increase in spending (4.7 per cent) while the Northern Territory had the smallest rise in through-the-year spending — up 0.8 per cent, but dropping from 1.6 per cent in April.

Originally published as Cost of living pressures laid bare in ABS household spending report