Household spending on discretionary goods and services was 0.6 per cent lower compared to May last year, new Australian Bureau of Statistics (ABS) data revealed.
ABS head of business indicators Robert Ewing said fashion is a key driver for the slump, with a 3.4 per cent drop in spending in May 2023 compared to May 2022. This followed a 1.7 per cent drop in April, with March seeing a rise of 2.4 per cent through the year.
Leading the drop in discretionary spending in May is furnishings and household equipment at 4.8 per cent.
“While overall household spending rose 3.3 per cent in May compared to the same time last year, it was the lowest growth rate since July 2021,” Ewing said. “This comes as households respond to cost-of-living pressures.”
The overall increase in household spending was driven by Hotels, cafes and restaurants (+7.8 per cent) and Transport (+7.7 per cent). These categories contributed to the 7.2 per cent rise in spending on services.
Goods spending saw a 0.9 per cent fall, which is the largest decline since July 2021. Spending on Food was the only positive contributor, rising 5.8 per cent, with the May Monthly Consumer Price Index Indicator showing a 7.9 per cent rise in food prices.
Household spending increased in all states and territories in May 2023 compared to May 2022.
Despite the lift, clothing and footwear spending dropped in every state and territory, with Northern Territory and Australian Capital Territory recording significant drops of 15 per cent and 14 per cent respectively. This was followed by Tasmania at -7.4 per cent, South Australia at -5.1 per cent, Victoria at -3.5 per cent, Western Australia at -3.2 per cent, and Queensland and New South Wales even at -2.7 per cent.
Western Australia recorded the most significant increase in spending (+4.7 per cent), led by rises for transport (+13.9 per cent) and health (+12.2 per cent).
Rises in spending growth were smaller in all states and territories this month compared to last month. Northern Territory had the smallest rise in through-the-year spending with 0.8 per cent, dropping from 1.6 per cent in April.