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Household spending in August has been driven by a jump in non-discretionary spending, including transport, according to the ABS.
The latest Monthly Household Spending Indicator from the Australian Bureau of Statistics (ABS) has revealed that households increased their spending by 4.8 per cent through the year to August, backed by an increase in non-discretionary spending – particularly transport.
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The data, released on Thursday (5 October), found that household spending increased for services by nearly 10 per cent (9.8 per cent) but fell for goods (down 0.7 per cent).
Spending on non-discretionary goods and services rose 9.1 per cent in the month, driven by spending on transport (up 17.1 per cent) and health (8.0 per cent).
ABS head of business statistics Robert Ewing said petrol prices and holiday travel were key reasons for the jump in August.
He commented: “Spending on transport made the largest contribution to the rise in August.
“Transport spending rose 17.1 per cent over the year, which is higher than the 10.9 per cent growth rate in the 12 months to July.
“Higher petrol prices, as reported in the August Monthly Consumer Price Index Indicator, as well as spending on holiday travel and public transport contributed to the rise in transport spending.”
Discretionary spending remained flat at 0.0 per cent, the data revealed. Spending on hotels, cafes, and restaurants was up 6.9 per cent, but was offset by a fall in furnishings and household equipment (down 12.1 per cent).
Household spending increases were the highest in Western Australia and the ACT (9.9 per cent and 8.2 per cent, respectively) while NSW saw the lowest spending increase, according to the ABS’ data at only up 2.9 per cent.
The increase in spending in August could be a boon for businesses, which have been facing cash flow pressures in recent months.
Speaking on The Adviser’s In Focus podcast recently, OnDeck’s head of partnerships Nick Reily stated: “We know small businesses have been facing several challenges this year. Inflation is one, tax obligations is another, with increased pressure from the ATO, and there [are] also labour and supply chain challenges as well.”
Indeed, accountancy firm Grant Thornton’s 2023 Family Business Survey further revealed that 91 per cent of businesses felt improving cash flow was their organisation’s greatest challenge.
It attributed the findings to the difficult economy as high inflation, increasing costs, and raised interest rates have all been impacting businesses’ cash flow.
As businesses prepare for the holiday period, it is expected that more businesses will turn to brokers for finance.
Mr Reily said: “As we come up to the festive period in Q [quarter] four, we will see that demand increase again.
“I think if you look at the [savvier] brokers they’re actually the ones that get in early around November and take advantage of the promotions we usually run.”
Similarly, broker and Accendo Financial partner Trent Carter recently told The Adviser that brokers would continue to be valued advisers as “as the average business owner will need a good SME-focused broker to help them navigate this expanding world of [finance] options”.
[In Focus: Key trends in the business lending space]
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