Australians are shifting more of their spending to necessities that are driven by; ongoing high inflation rates and high mortgage rates which have seen consumers cut spending through rationalization. New information derived from the Australian Bureau of Statistics revealed today that in July, households utilized a proportion of the extra money resulting from the recent tax reductions for saving.
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The increase in household expenditure was modest
According to the ABS report, there was a 0. Overall expenditure of households, which reflects the underlying trend in spending, was 8% higher in July than a year ago and 0.7% more than in June on a seasonally adjusted basis. This marginal growth achieved after a 0.5% increase in June meant that the increase in spending only partially compensates for the previous decrease.
Non-discretionary spending is again leading Total Non-Discretionary Expenditure after crossing the halfway point in its advance during recent years.
Fixed consumption also went up by 1 % though it was outperformed by other categories of expenditure in terms of growth rate. 4% — the fastest monthly growth since September of last year. More disturbingly, spending on health increased by 6.8% and this shows that Australian families are more concerned with essential services than other commodities. Further, the spending on the minor and other expense accounts also showed enhancement in July including; car repair and maintenance.
Robert Ewing, head of business statistics at ABS said that Non- discretionary expenditure was higher than discretionary expenditure because cost-price squeeze remained a pressure that operated on households.
Hoarding Cash as Challenges in the Economy Loom
Since then Australian households were given billions of dollars in tax cuts and electricity rebates in July but they still preferred to save. There was an increase in the deposited by households by 2. 1% in July which amounted to A$31 billion ( roughly $20. 78 billion USD) This is as per the data available with the RBA was the fastest monthly growth rate in the past three years.
Effects Of Declining Discretionary Expenditure
In the April-June quarter, consumers’ expenditure declined by 0.2% due to which the economic growth the country has witnessed is the lowest since the early 1990s not including COVID-19 effects. Gareth Aird, Head of Australian Economics at the Commonwealth Bank of Australia (CBA) highlighted that the spending has fallen across several discretionary categories mainly translating to a 1 percent depreciation in food costs.
‘Households are not consuming lesser foods, but they are opting for cheaper foods,’ said Aird while pointing out that cost-push factors are driving consumption trends.
Conclusion
With Australian households still uncertain of their financial stability, more and more are only focusing on basic needs while at the same time saving Thus, the change in consumers’ preferences is one more factor that indicates inflation and high mortgage rates in everyday life.
