Spending growth over the year to May was stronger among mortgage holders than non-mortgage holders, driven by higher discretionary spending and a larger pullback in travel-related spending among non-mortgage holders.
Growth softened from the previous month for both groups — consistent with an economy that has lost momentum through the first half of 2026, with consumption growth trending to approximately 1.5% annualised — well below 2025's 2.6% — and rate cuts not expected until Q2 2027.
Total consumer spending rose 1.1% in May, reversing April's decline, according to NAB's Consumer Spend Trend report. Excluding fuel — where prices continued to ease — spending climbed 1.6%, driven by a recovery in travel and hospitality after an abnormal spike in refund activity the previous month.
Over the past year, total spending is up 6.5%, with utilities and telecoms the strongest-growing major category at +27% annually, reflecting the unwinding of energy bill rebates rather than any genuine expansion in household capacity.
Dario Medugorac, NAB head of small business Victoria, noted the pattern of selective but persistent spending.
"Australians are still finding room for cafés and restaurants, even as budgets tighten," Medugorac said. "What we are seeing is more selective spending, and businesses that move quickly are the ones winning it."
Café and restaurant spending rose 7.6% over the year and 2.9% in May alone — well above the overall spending growth rate — suggesting households are protecting small social expenditures even under pressure.
Household goods spending was essentially flat in May and up just 1.1% annually, pointing to continued restraint on larger-ticket purchases. Personal goods — clothing, accessories, toys — rose 8.4% over the year, reinforcing the pattern of consumers choosing smaller, more frequent outlays over major purchases.
Fuel is the most immediate watch point. Spending on fuel remains approximately 20% above pre-conflict February levels, and prices are expected to rise again when the fuel excise cut expires on 30 June. That could trim discretionary capacity in the second half of 2026 — arriving at the same time as the broader economic slowdown NAB's economists are already flagging.
Read the full NAB Consumer Spend Trend report for May 2026 here.
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