Australian household spending picked up sharply in October, pointing to more resilient borrower cashflows and potential upside risks for inflation and rates that mortgage advisers should keep in view.
The ABS household spending data showed the strongest lift since early 2024, with gains broad-based across goods, services, states, and discretionary categories.
In October 2025, household spending rose 1.3% month-on-month in seasonally adjusted current prices and was 5.6% higher than a year earlier, according to the ABS. All nine spending categories increased over the month – the first time this has happened since January 2024.
Westpac economist Neha Sharma (pictured) said the indicator “jumped 1.3%mth in October, above ours and the market consensus of 0.6%mth. This was the strongest monthly increase since the start of 2024.”
Sharma noted that “the annual rate is around a two-year high of 5.6%yr and near-term momentum is stronger, with the six-month annualised pace at 7.2%.”
Once inflation (around 3.8% year-on-year) and population growth (around 1.7% year-on-year) are taken into account, Sharma estimates this equates to “around a 0.1%yr increase in real, per capita terms.”
The ABS household spending indicator showed that, in seasonally adjusted current price terms:
Sharma said “the strength came from a 1.7%mth lift in goods spending. The ABS attributed this to promotional events,” noting that several goods categories also posted strong October CPI gains after falls in September.
“Discretionary segments saw a notable 1.6%mth lift after near flat reads the past two months. Meanwhile, non-discretionary spending rose 0.8%mth again to be at a two-year high,” she said.
Sharma highlighted that “for the first time since January 2024 all nine spending categories lifted. The strength came from clothing & footwear (3.5%mth), and furnishings & household equipment which rose 3.0%mth, the strongest since October 2021.”
Other monthly gains included:
The ABS “experimental retail turnover” estimates based on the same card data showed retail up 1.6% month-on-month (5.7% year-on-year), with food up 1.3% (4.8% year-on-year) and non-food retail up 1.8% (6.8% year-on-year).
Spending rose in seven of eight states and territories in October in seasonally adjusted current prices, with the strongest monthly increases in:
In these jurisdictions, the main drivers were:
Westpac said the pattern was broad-based, with Sharma noting that “spending also rose across all the major states.”
Sharma cautioned that the “numbers may be partly reflecting firmer price growth in some categories which are boosting nominal values. Though encouragingly, the lift in discretionary goods spending did not come at the expense of weakness in discretionary services – a pattern we have usually seen before.”
For more insights, read Westpac’s Household Spending Indicator.
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