Household spending was up in March, but the headline number is masking a growing crisis for households. This is a story of households paying more for less:
🪙 Total spending was up 1.6% MoM and 6.3% YoY
🪙 Transport was up 5.1%, driven by a 32.8% spike in fuel prices
🪙 Food was up 1.7% (with the ABS noting precautionary stockpiling alongside higher prices)
🪙 Non-discretionary spending was up 3.4%, discretionary spending was up 0.6%
🪙 Goods spending was up 2.9%, services up 0.1%
🪙 Seven of nine categories recorded increases
The key driver of the increased spending was more money being spent on fuel. The ABS published an experimental fuel volume estimate that shows that households spent dramatically more on fuel while the volume of fuel purchased actually fell.
Food spending is a similar story, it was up strongly, but the ABS attributed this to both higher prices and stockpiling behavior, not a genuine increase in consumption.
The spending categories that are driving growth are overwhelmingly essentials. Transport, food, and miscellaneous goods and services (which includes things like insurance) accounted for the bulk of the increase. These aren't categories where households have a choice. Fuel, groceries, and insurance premiums need to be paid regardless of what is happening to the household budget. The one clearly discretionary category, hotels, cafes and restaurants, fell 0.9%. That is consistent with the collapse in consumer confidence that's been happening since the start of 2026.
There are two crucial points to take away from this print:
⚠️ This data only captures the very beginning of the squeeze. March was the first full month of the fuel shock and the second order effects on food, freight, packaging, and raw materials will take far longer to work their way through the supply chain.
⚠️ Fuel prices are going to have to go even higher. Volume in March fell only 1.3%. That’s nowhere near enough demand destruction to offset a 10% to 15 %drop in supply. Unless the government wants to start rationing, we need higher prices to curb demand.
For SMEs, the headline spending number is not good news. Households are spending more because they have to, not because they want to and the squeeze is only going to get worse.