Household consumption expenditure

IBISWorld forecasts total household consumption expenditure to rise by 0.7% in 2024-25 to reach $1315.0 billion. This increase is driven by heightened spending on health goods like OTC medication. This trend reflects a growing prioritisation of health and wellbeing among households. Growth in discretionary expenditure was mainly fuelled by spending on music and sporting events. Further growth was offset by Government schemes relating to energy bill relief, as they reduced household utility spending.

Long-term household consumption expenditures are determined by several key factors: population growth, disposable income growth and the savings rate. As disposable income increases, households have greater spending power on consumer goods, contributing significantly to overall consumption expenditures, particularly when savings rates remain steady. Recently, the resurgence of migration has further influenced consumption expenditure. The influx of migrants who need to purchase goods and services for their basic needs, like food, clothing and shelter, has boosted household consumption expenditure. Also, household savings play a critical role in stabilising overall consumption trends by acting as a buffer during economic cycles. When income declines, consumers can use their savings to maintain spending, smoothing out consumption patterns over time.

While there is no notable difference between non-discretionary and discretionary spending patterns as a share of total spending, there has been reduced spending on goods, indicating a reallocation of household budgets towards necessary and discretionary services. This suggests a focus on long-term benefits and prioritisation of experiences over materials. High cash rates have heightened the level of interest payments in Australia, but have been slow to dramatically influence all consumer behaviour on a large scale. Rising interest payments have subdued the purchasing power of households and have partially offset overall growth in expenditure in the past few years. IBISWorld forecasts total household final consumption expenditure to grow at a compound annual rate of 2.6% over the five years through 2024-25.