Australian household spending rises in June driven by transport and recreation

Australian households have spent more on transport and recreation and culture in June, according to new data from the Australian Bureau of Statistics (ABS).

The government agency said spending increased by 0.8 per cent month-on-month, with much of that pick-up attributed to a 3 per cent rise in transport spending.

ABS head of business statistics Tom Lay said this was reflected by a surge in new vehicle sales.

"Electric vehicle sales increased significantly over the year and have continued that trend in June, accounting for a growing share of overall new vehicle sales as households adjust their spending behaviour in response to rising fuel prices," Mr Lay said.

Across April, May and June, nearly one in every two vehicles sold was either electric or hybrid, according to data from the Australian Automobile Association.

Air travel spending was the second-largest contributor to the strength in transport spending, as it recovered from the disruption caused by the Iran war. The level of transport spending is now back to pre-war levels, after declining 4.4 per cent in April.

Household spending excluding transport rose by a more muted 0.3 per cent, with around a third of the consumption categories recording monthly declines.

The 1.4 per cent rise in recreation and culture came from a few categories in June.

Households spent more on electronic goods, performing arts, live entertainment and gambling activity, likely supported by major sporting events.

The ABS said some of the rise in spending on performing arts and live entertainment reflected advanced purchases of tickets for future performances.

When looking at state and territory spending for June, all eight recorded an increase with the strongest being in Tasmania (+1.6 per cent), ACT (+1.4 per cent) and Western Australia (+1.3 per cent).

Despite an overall increase in household spending, the Commonwealth Bank of Australia expects it to soften over the remainder of the year.

"This is especially in light of accelerating declines in housing prices," CBA senior economist Ashin Clarke said.

"However, the data highlights the risk that household spending may turn out stronger than we expect due to solid aggregate financial buffers, which would add to the case for even tighter monetary policy if realised."

Cash rate ramifications?

The Reserve Bank of Australia (RBA) has raised interest rates three times this year to 4.35 per cent to fight inflation, fully reversing the amount of policy easing made in 2025.

The bank has consistently warned policy tightening might not be over as higher energy prices feed through the economy.

But Abhijit Surya, senior APAC economist at Capital Economics, believes the moderate pick-up in household spending data will not move the needle for the RBA.

"Our base case remains that the bank is done tightening policy," he said.

"But, there are two points worth making. First, the RBA has previously noted that the mapping from the indicator to the national accounts measure of consumption is 'imprecise'.

"So it may well take the latest figures with a pinch of salt.

"Second, with fuel excise cuts having expired on August 2nd, automotive fuel inflation is set to provide a boost to headline inflation, even if oil prices themselves don't climb any higher."

As of August 3, the ASX RBA rate tracker estimates there will be no change to the cash rate when the board meets on August 11.