Australian household outlays retreated in December following a period of elevated purchases tied to major sales events, the national statistics agency reported on Monday. The Australian Bureau of Statistics (ABS) said its monthly household spending indicator (MHSI) fell 0.4% in December to A$78.86 billion ($55.2 billion).
The decline followed a 1% increase in November and a 1.4% rise in October. On an annual basis, the pace of spending growth cooled to 5.0% from 6.3%.
ABS head of business statistics Tom Lay said the timing of sales and cultural events in October and November pushed purchases forward, reducing spending in December. "We saw high spending in October and November, which had major sales and cultural events boost spending," he said. "The fall in December indicates that households brought forward purchases during sales events in October and November."
Breaking the figures down, monthly spending on goods dropped 0.5% in December, with consumers cutting back on purchases of clothing and footwear as well as household appliances and tools. Spending on services edged down 0.3%, with lower transport costs and reduced health spending cited as the main drivers.
Despite the December decline, the quarterly picture remained positive: sales volumes grew by 0.9% from the prior quarter. That rise is estimated to add 0.3 percentage points to gross domestic product for the period.
The release comes shortly after the Reserve Bank of Australia raised its cash rate by a quarter point to 3.85% last Tuesday. The RBA's move followed three rate cuts last year that were associated with a pickup in inflation.
Headline inflation ran at 3.6% in the last quarter and is expected to reach 4.2% by June this year, a rate well above the RBA's stated target band of 2% to 3%. Analysts and market pricing show an elevated chance of further tightening: swaps imply a 74% probability of another rate increase in May, and an additional 37 basis points of tightening is expected over the year.
Policy makers have cited strong consumer spending, record-high house prices and easy access to credit for households and businesses as factors that have kept financial conditions relatively loose despite higher policy rates.
On the outlook, Ben Udy, lead economist for Oxford Economics Australia, noted the recent RBA hike will act as a drag on spending growth next year. "Looking ahead, the RBA's rate hike last week will weigh on spending growth in 2026," he said. "However, we expect inflation to cool over the course of the year which, along with solid wage growth, should prevent consumers from turning too sour."
($1 = 1.4225 Australian dollars)