However, although this is the fifth consecutive rise in quarterly GDP, growth slowed in each of the last two quarters.
The household saving-to-income ratio fell for the fifth consecutive quarter (from 7.1 per cent to 4.5 per cent) while gross disposable income fell in the December quarter as growth in total income payable outpaced the increase in total gross income.
This was despite the strength in compensation of employees and interest received on deposits.
“The household saving ratio continued to decline in the December quarter, to the lowest level since September 2017. The fall was driven by increased interest payable on dwellings, income tax payable and increased spending,” said Katherine Keenan, ABS head of national accounts.
Ms Keenan said the 0.4 per cent rise in total consumption and 1.1 per cent rise in exports were the primary contributors to GDP growth in the December quarter.
“Continued growth in household and government spending drove the rise in consumption, while increased exports of travel services and continued overseas demand for coal and mineral ores drove exports,” she said.
Household spending rose 0.3 per cent in the quarter, contributing 0.2 percentage points to GDP. Growth was driven by spending on food (up 2.4 per cent), Hotels, cafes, and restaurants (up 1.6 per cent) and transport services (up 5.7 per cent).
“After four quarters of strong growth following the Delta-variant lockdowns, growth in household spending softened in the December quarter. Spending on discretionary services drove the rise in household consumption, however growth markedly slowed in comparison to the September quarter,” Ms Keenan said.
Treasurer Jim Chalmers said more household income is being directed to meeting higher mortgage interest repayments, which were 23 per cent higher in the quarter and 85 per cent higher through the year.
“We continue to see further signs of strengthening wages growth in today’s figures, with compensation per employee up 4.4 per cent through the year,” he said.
Meanwhile, compensation of employees increased 2.1 per cent, following a rise of 3.2 per cent in the September quarter. The continued strength was underpinned by the tight labour market in the December quarter. The unemployment rate remained at historical lows, job vacancies were elevated, and wage rates grew as competition continued for skilled workers. This quarter also saw the introduction of the Fair Work Commission’s 2021–22 minimum wage decision that impacted the aviation, tourism, and hospitality industries, further contributing to growth.
The data also showed that private non-farm inventories experienced a run-down with retail inventories declining, reflecting the fall in consumption goods imports. A drawdown in inventories was also seen in coal mining in response to strong overseas demand and low production due to poor weather in parts of the country.
Meanwhile, the monthly consumer price index (CPI) indicator rose 7.4 per cent in the year to January 2023, lower than the 8.4 per cent rise for the year to December 2022.
However, it is the second-highest annual increase since the start of the monthly CPI indicator series in September 2018, signifying ongoing high inflation.
The most significant contributors to the annual increase in the January monthly CPI indicator were housing (+9.8 per cent), food and non-alcoholic beverages (+8.2 per cent), and recreation and culture (+10.2 per cent).
“Inflation remains the defining challenge for our economy in 2023. While we are cautiously optimistic it has peaked, it will still be higher than we would like for longer than we would like,” said Dr Chalmers.
