Household spending was 0.7 per cent lower in July 2023 compared to the same month last year, according to new data from the Australian Bureau of Statistics (ABS).
Clothing and footwear drove the second largest drop in household spending by 7.5 per cent, just behind furnishings and household equipment (-7.9 per cent) and ahead of alcoholic beverages and tobacco (-4.0 per cent).
ABS head of business statistics Robert Ewing said households have curbed their spending over the past 12 months amid higher interest rates and inflation.
“This is the first time since February 2021 that the spending indicator has fallen,” Ewing said.
“Spending on discretionary goods and services was down for the fourth straight month. It fell 3.3 per cent over the year, as households adapt to cost of living pressures.
“Non-discretionary spending rose 1.7 per cent, which is the lowest growth rate since early 2021.”
Goods spending saw its largest decline since July 2021 with a 4.1 per cent fall, while spending on services rose 2.4 per cent.
Recreation and culture household spending came in fourth at negative 3.9 per cent.
Through the year household spending fell in New South Wales, Victoria, Tasmania and the Northern Territory, but lifted in Queensland, South Australia, Western Australia and the Australian Capital Territory.
Clothing and footwear through the year spending dropped in all states and territories, including a 23 per cent drop in the NT, with the territory also recording the largest overall household spending drop of 6.7 per cent.
In Victoria, the weakest household spending categories were alcoholic beverages and tobacco (-9.2 per cent) and clothing and footwear (-7.2%), with furnishings/household equipment and recreation and culture both down 5.6 per cent.
In Tasmania, recreation and culture hit the lowest point at negative 13.6 per cent, with clothing and footwear coming in second at negative 9.6%.
Clothing and footwear also recorded a 13.5 per cent drop in the ACT, with NSW down 9.4 per cent, SA down 6.7 per cent, Queensland at 6.3 per cent, with WA recording the lowest drop of 2.3 per cent. Furnishings and household equipment was the only other category to record drops in all states and territories.
When comparing July to June, spending growth rates were lower in all states and territories. The NT also had the largest slowdown in spending compared to the same time last year, dropping from -0.7 per cent in June to -6.7 per cent in July.