The ABS Monthly Household Spending Indicator pointed to continued resilience in Australian consumer demand during June, with household spending rising 0.8% during the month, well above market expectations of 0.2%. The result followed an upwardly revised 1.2% increase in May, lifting annual spending growth to 6.0% year on year. The stronger-than-expected outcome suggests households have remained willing to spend despite higher interest rates and ongoing cost-of-living pressures.
The strength was concentrated in discretionary categories, with discretionary spending increasing 1.2% over the month. Transport was the standout, rising 3.0%, driven primarily by strong new vehicle purchases, particularly electric vehicles, as households continued to respond to elevated fuel prices. Air travel spending also rebounded to levels seen prior to the travel disruptions caused by the Middle East conflict earlier in the year, providing a further boost to transport expenditure. Recreation and culture rose 1.4%, supported by spending on consumer electronics, live entertainment and major sporting events.
The data reinforces the picture of a consumer sector that has proven more resilient than anticipated. The RBA has emphasised that moderating household demand is an important mechanism through which tighter monetary policy returns inflation sustainably to target. However, the June spending figures indicate this adjustment remains gradual, with stronger consumer activity likely to provide ongoing support to domestic demand and services inflation. While falling house prices and higher borrowing costs may weigh on spending over coming quarters, there is little evidence from the latest data that households have materially curtailed discretionary expenditure.
For monetary policy, the release strengthens the case for maintaining a cautious stance. The stronger-than-expected spending outcome follows a series of resilient domestic activity indicators and suggests aggregate demand remains firm. While this data release alone is unlikely to alter the RBA's policy outlook, it reduces confidence that higher interest rates are materially slowing consumption and supports the Bank's view that inflation risks remain tilted to the upside.
Source: Monthly Household Spending Indicator, June 2026.