Australian household spending rose 1.6% in March, the strongest monthly increase in two years, according to new ABS data. The monthly rise follows modest gains of 0.3% in February and 0.2% in January, taking annual nominal growth to 6.3%.
Transport was the clear driver.
“Household spending rose strongly in March, driven by a 5.1% rise in transport costs as fuel prices climbed in response to the conflict in the Middle East,” ABS head of business statistics Tom Lay said.
Fuel prices spiked through the month, with motorists making smaller, more frequent trips to service stations, while higher public transport spending suggested some households were shifting away from private vehicles.
Food spending increased 1.7% in March, reflecting both higher prices and precautionary stockpiling as households reacted to the risk of renewed global supply chain disruption.
On an inflation‑adjusted basis, household spending volumes rose 0.7% over the March quarter 2026, extending a run of six consecutive quarterly increases.
Lay noted that “Household spending volumes rose for the sixth quarter in a row,” with non‑discretionary categories such as health and food leading the gains at 1.5% and 0.8% respectively. Annual real growth reached 2.8%, the strongest since mid‑2023.
Westpac’s monthly household spending indicator shows a similar pattern, with quarterly volumes up 0.7% and nominal spending rising 1.0%. Despite the fuel spike, the bank describes “surprisingly soft price growth within the quarter,” pointing to a relatively contained overall inflation impulse from consumer spending. Essential items continued to outperform, while discretionary services such as hospitality showed signs of ongoing restraint.
Westpac expects total consumption to increase 0.6% in the June quarter national accounts, but flags rising headwinds. The bank notes that “Downside risks are more elevated moving into Q2,” citing weaker consumer sentiment and evidence of slowing non‑fuel spending.
For first‑home buyers, existing owner‑occupiers and property investors, the data indicate household budgets are being reshaped by higher unavoidable costs even as real spending growth moderates. That combination is likely to remain a key influence on borrowing capacity and mortgage demand as interest rates stay elevated.Top of FormBottom of Form
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