Australian household spending rose slightly in September, up 0.2% in seasonally adjusted terms, according to new data from the Australian Bureau of Statistics (ABS).
The modest rise followed a flat result in August and a 0.4% increase in July.
"Spending on non-discretionary items drove the overall rise, as households spent more on food, health, and petrol,” said Tom Lay, ABS head of business statistics.
“Discretionary spending was flat for September, with higher spending on recreation and culture being offset by falls for air travel and accommodation.”
Four of the nine spending categories rose in September, led by recreation and culture (+1.1%), health (+0.7%) and food (+0.6%).
Alcoholic beverages and tobacco recorded the largest fall (–0.8%), with the ABS noting this only includes legal purchases of tobacco.
On an annual basis, miscellaneous goods and services (+8.7%) and health (+8.1%) showed the strongest growth. Services spending was 7.2% higher than a year ago, while goods spending rose 3.4%.
State results were mixed: New South Wales (+0.8%) and South Australia (+0.6%) saw the strongest growth, while the ACT (-2.4%) had the biggest fall.
Quarterly household spending volumes rose 0.2% in the September quarter, extending the run of gains to a fifth straight quarter.
“Household spending volumes rose for the fifth quarter in a row,” Lay said. “Non-discretionary categories such as health and food drove the rise, increasing by 1.8% and 1.1% in the September 2025 quarter.”
Compared with the same quarter last year, household spending volumes were up 2.7%, the strongest annual growth since March 2024.
Westpac: Spending momentum slows to a four-quarter low
According to Westpac economist Neha Sharma (pictured), September’s result came in weaker than expected.
“The household spending indicator rose 0.2%mth in September (nominal), surprising both Westpac and the market to the downside,” Sharma said.
She noted the slowdown followed a period of stronger gains earlier in 2025.
“The monthly prints have slowed considerably since May but base effects are still supporting the through-the-year growth rate which lifted slightly to 5.1%yr,” the Westpac economist said
For the September quarter, nominal spending rose 1.1%, but given higher price growth, real spending (volumes) slowed to a four-quarter low of 0.2%.
“By broad categories, there was a flip in the drivers of growth compared to the past two months. Goods spending rose 0.4%mth in September, beating a flat result for services spending,” Sharma said.
“On a three-month annualised basis, non-discretionary spending accounted for over 80% of growth, its largest share since April.”
Recreation and culture (+1.1%) and health (+0.7%) were the strongest categories, while spending fell for clothing and footwear (–0.6%), transport (-0.4%), and hotels, cafes and restaurants (-0.3%).
Westpac expects household momentum to remain subdued heading into 2026.
Sharma said recent tax and rate cuts have provided temporary support, but “current momentum may fade heading into 2026 as tax and rate cut boosts to disposable incomes dissipate and employment growth slows.”
However, she noted that household savings remain relatively strong: “A consumer move to dip into savings could sustain discretionary spending growth for longer.”
For mortgage brokers, the latest household spending data underscores a market still defined by caution and constrained budgets. With consumers focusing on essentials and discretionary spending flat, borrowers are likely to remain highly rate-sensitive and selective about new commitments.
This environment favours brokers who can guide clients through tighter serviceability and identify opportunities as rate stability and improved confidence gradually return.
For more data and insights, read the ABS media release and full Westpac report.
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