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Australian household spending was flat in August, below economists' expectations, CreditorWatch said.
Annual household spending growth remained at 6.8%. CreditorWatch Chief Economist Ivan Colhoun said higher fuel prices and broader inflation pressures continued to shape the figures.
The unchanged monthly reading followed three months of strong increases. Colhoun said the August result looked more like a correction after earlier strength than a clear deterioration in consumer demand.
He said some spending was likely brought forward by end-of-financial-year discounting, as households under financial pressure took advantage of sales in previous months. August also saw a reversal in recreation and culture spending after a lift tied to purchases of US NFL tickets dropped out of the data.
Excluding fuel, household spending fell 0.3% month on month. Fuel-related spending rose 8.1% over the month after Australian government fuel price subsidies ended and oil prices increased sharply.
The pattern across the states also pointed to a pullback from stronger earlier readings. That suggests recent spending momentum may have overstated household resilience amid higher living and borrowing costs.
Colhoun said the figures should not necessarily be read as weak in isolation. "This reduces some of the strength of the spending signal in prior months but is not exactly a weak print," he said.
Category shifts
Recreation and culture spending fell 1.4% in the month as the previous boost from NFL ticket sales faded. Other category moves also pointed to seasonal changes, with households responding to end-of-financial-year promotions while managing tighter budgets, Colhoun said.
Spending at hotels, cafes and restaurants was one of the few areas to post a noticeable rise in turnover during the month. Transport also increased, largely because of fuel prices, although the National Statistician noted continued strong sales of electric vehicles.
Colhoun said the annual pace of spending growth reflected inflation pressures rather than broad-based strength in real consumption. "Growth of 6.8% y/y, boosted by fuel prices, is likely indicative of continuing above target inflation," he said.
Rates focus
The figures came as attention turned to the Reserve Bank of Australia's policy stance and the path of interest rates. Colhoun said the household spending result would not change the central bank's immediate decision, but it could add to debate about how aggressively policymakers intend to respond to inflation.
The key question, he said, was whether the RBA Board had shifted to a firmer inflation-fighting stance after recent remarks from senior officials or would continue with a more gradual approach to tightening.
Inflation risks still appear skewed to the upside, Colhoun said. Any indication that this view remains in place would suggest the tightening cycle is not yet complete, he said.
Higher rates would add to pressure on households and businesses already dealing with years of accumulated cost increases and elevated fuel prices. At the same time, Colhoun said parts of the economy were still benefiting from investment linked to artificial intelligence, creating an uneven backdrop for consumption and business conditions.
That mixed picture is becoming more important for lenders, businesses and policymakers assessing the underlying strength of domestic demand. Flat spending in a single month does not by itself point to a collapse in consumption, but the details suggest consumers are becoming more selective and more exposed to shifts in essential costs such as fuel.
Colhoun said the next signal from the central bank would matter more than the August spending headline. "I'd expect the statement to continue to suggest inflation risks remain to the upside," he said.