Australian household spending grew 0.6% in September 2026, but much of the lift came from higher prices rather than stronger activity. Westpac Economics now expects spending to lose momentum as successive interest rate rises accumulate.
The Australian Bureau of Statistics (ABS) household spending release for September showed the rise followed a 0.1% fall in August. Westpac had forecast a 0.5% contraction, while the market expected a 0.2% gain. Annual growth reached 6.8%.
Over the September quarter, nominal spending rose 2.1%, the strongest result since the December quarter of 2022. Volumes rose 0.7%, which implies quarterly price growth of 1.4%.
Fuel was a major factor. The ABS said fuel spending jumped 5.4% in September after higher global oil prices and the end of fuel excise relief on 3 August, even though experimental ABS data suggests the volume of fuel purchased fell.
Real spending still held up. Tom Lay, ABS head of business statistics, said: “Household spending volumes continued to grow in the September quarter, marking the fourth quarter in a row of growth.”
Transport volumes led with a 1.6% rise, partly reflecting a rebound in air travel after Middle East disruptions in the June quarter. By state, Western Australia led real growth at 1.4%, followed by Victoria at 0.9%. Tasmania was the only state where volumes fell, down 0.1%.
The housing market is losing ground: Cotality’s October 2026 Home Value Index recorded a further 1.2% fall in national dwelling values, leaving them 6.7% below their March peak.
The slowdown is reaching household budgets. Furnishings and household equipment spending slipped 0.2% in September, and Westpac economist Luka Belobrajdic said the fall likely reflected ongoing weakness in housing turnover.
Westpac’s Household Spending Indicator Bulletin argues the third quarter will mark a peak, with Belobrajdic writing that “this will likely be the high water mark for spending.”
He pointed to renewed pressure in global energy markets and the cumulative effect of four rate increases in the first three quarters of 2026. With consumer pessimism, cost-of-living pressures and weaker household wealth, Westpac expects spending to slow further in 2027.
That view aligns with the Reserve Bank of Australia, which lifted rates again at its 3 November meeting in a six-to-three vote. The board’s post-meeting statement flagged that falling housing prices and turnover are expected to weigh on household consumption.
The ABS will publish the September quarter National Accounts on 2 December.
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