The latest Australian Bureau of Statistics data has revealed that household spending increased by 4.3 per cent in January 2022 when compared with January 2021 in current price, calendar adjusted terms.
However, the household spending data did not complement the Consumer Confidence Index, which fell to one of its lowest levels since 2020.
Consumers, sick of lockdowns, were spending money on getting out and about with the biggest increases in the recreation and culture, up 11.3 per cent, and on food (9.7 per cent).
“Household spending increased in seven of the nine spending categories in January 2022 when compared to January 2021. The only categories with decreased spending compared with January 2021 were on alcoholic beverages and tobacco (-10.6 per cent) and furnishings and household equipment (-4.0 per cent),” Jacqui Vitas, head of macroeconomic statistics at the ABS, said.
“Eased COVID-19 restrictions in January 2022 across most states saw consumers shift spending from their homes to hospitality and retail venues.”
The Northern Territory (down 2.4 per cent) was the only state or territory with a decrease in household spending in January 2022 when compared with January 2021. It should be noted that the Northern Territory was the only jurisdiction with imposed lockdown restrictions during the month of January 2022.
Western Australia (7.1 per cent) recorded the largest increase in household spending through the year.
When comparing January 2022 to pre-pandemic January 2020 estimates, total household spending decreased 0.6 per cent in current price, calendar adjusted terms. Transport (down 25.7 per cent) and hotels, cafes and restaurants (down 11.7 per cent) remain well below pre-pandemic levels.
The household spending was not mirrored in the Consumer Confidence Index, however, which plunged 4.8 per cent last week across all states and territories, falling to its lowest level since early September 2020.
Despite spending being up people who expected a rise in inflation rose to 6 per cent this week with more people feeling their financial conditions will decrease in the future, dropping to their lowest levels since July and April 2020, respectively.
‘Current economic conditions’ declined for a fifth straight week. Dropping by 8.5 per cent it fell to its lowest since October 2020. ‘Future economic conditions’ bucked the overall trend and increased by 1.1 per cent.
“Consumer confidence dropped 4.8 per cent last week. It is now at its lowest since Victoria’s second COVID wave in early September 2020,” ANZ head of Australian economics David Plank said.
“The continued rapid increases in petrol prices saw inflation expectations rise to 6.0 per cent. Increasing petrol prices have had a sharp impact on households’ confidence for both ‘current’ and ‘future financial conditions’ with the two subindices dropping 10.3 per cent and 8.4 per cent, respectively, over the last two weeks.
“We noted last week that the weakness in consumer sentiment is at odds with the strength in employment and reflects pressure on household budgets as nominal wage growth lags the jump in inflation. The weakness in consumer confidence presents a growing near-term risk to the outlook for household spending.”
