Household spending in Australia has seen a steady increase at the start of 2025, with a 0.4% rise in January following a 0.2% increase in December, according to ABS.
“Household spending rose to start the new year, growing for the fourth straight month,” said Robert Ewing (pictured left), ABS head of business statistics.
The growth was primarily driven by a 1.5% increase in services, buoyed by higher expenditures on health services, air travel, and sports and physical recreation services.
In contrast, goods spending dipped by 0.6% in January, following robust sales driven by promotional activities like Black Friday at the end of 2024.
Health services saw the most significant increase at 2.5%, reflecting more spending on doctor visits and hospital services, ABS reported.
Transport spending also climbed by 1.1%, spurred by air and sea travel as Australians planned their travel for the year.
However, new vehicle purchases saw a decline, moderating the overall growth in household spending.
Despite some categories experiencing declines, such as furnishings and household equipment, and clothing and footwear, both dropping by 1.5%, the broader picture remains positive.
On an annual basis, household spending was up 2.9% from the previous year, with health and transport contributing the most to this increase.
The most robust growth rates were observed in the Northern Territory and the Australian Capital Territory, while New South Wales saw the smallest rise.
“Household spending is maintaining decent momentum,” said Neha Sharma (pictured right), an economist at Westpac. “Even after accounting for inflation, ‘real’ spending appears to be growing.”
The consistent performance of household spending, supported by tax cuts initiated in July 2024, indicated a resilient economic environment.
However, Westpac’s Card Tracker Index suggested that spending might have slightly softened in early February.
“The six-month annualised pace was firmer, tracking at 5.3% in January,” Sharma said.
As Australia navigates through 2025, the ongoing trend of steady spending growth provides a solid foundation for economic optimism, supporting a potentially robust year for both consumers and businesses.
