Australian consumer spending grew steadily in July while sentiment improved in August as households welcomed the RBA's decision to hold rates, though optimism remains scarce, new data shows.
NAB's Consumer Spend Trend report shows total consumer spending rose 1.1% month-on-month in July and 7.7% over the year, with growth recorded across both essential and discretionary categories.
Discretionary spending rose 1.2% for the month, led by personal goods, hotels, travel, and hospitality, suggesting households are still willing to spend on lifestyle categories even as living costs bite.
Fuel spending jumped 4.9% amid higher oil prices tied to escalating conflict in the Middle East and the partial unwind of the fuel excise discount, while utilities spending fell 2%, partly reflecting a milder winter in the eastern states.
This resilience wasn't evenly spread, however. Spending growth remained materially higher among mortgage holders than non-mortgage households over the year, driven by stronger discretionary spending on personal goods and household goods, while their utility spending grew more moderately by comparison.
Consumer confidence also lifted following the Reserve Bank's decision to keep the cash rate on hold at its 11 August meeting.
The Westpac–Melbourne Institute Consumer Sentiment Index rose 6% to 88.9 in August, up from 83.9 in July, with the gain concentrated among survey responses collected after the RBA's announcement. Renter sentiment, by contrast, slipped slightly over the month.
Despite the improvement, Westpac chief economist Luci Ellis cautioned that the overall picture remains subdued, noting "pessimists still outnumber optimists, especially about their current finances."
The report also found 59% of respondents still expect further mortgage rate increases, even after the RBA's hold decision provided some clarity on the near-term outlook.
For first-home buyers and property investors, the data offers mixed signals. The Westpac–Melbourne Institute house price expectations index fell to a fresh three-year low of 110.8, with outright owners far more likely than mortgage holders or renters to anticipate price falls. Meanwhile, the unemployment expectations index rose 4.4% to 135.7, partly reversing last month's improvement.
The RBA's Monetary Policy Board is set to meet again on 28–29 September.
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