Latest ‘dollar’ estimates of where we spend our money
  • A new report from CommSec provides further evidence that consumers are being hit hard by a combination of higher prices and higher interest rates.
  • We’ve broken down all the major items that Aussies spend their money on each week. And the figures reveal that prices are rising across the board.  
  • The clear evidence is that higher prices and higher interest rates are working to slow consumer spending. The hope being that the Reserve Bank could soon call a pause to its rate hikes.   

 

We are hearing about the rising cost of living on almost a daily basis, but how is it actually translating to dollars and cents?

CommSec analysts have compiled some detailed estimates on consumer spending, based on the latest inflation data from the Bureau of Statistics. Overall, the CommSec analysts estimate that the average family spent over $1,800 a week on a range of goods and services in the September quarter, up $123 a week compared with a year ago or 7.2 per cent.

By comparison, the latest estimate shows the average annual gain in take-home pay would have been just $21.70 a week if the worker received the 1.9 per cent increase recorded by the ABS.

“While that suggests the average family is falling behind in a big way, we don’t know how many are working in the household and what they are buying each week and in what quantity,” noted CommSec Chief Economist, Craig James. “But it serves as a base for analysis.”

 

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For instance CommSec analysts found that Aussie families spent $60 a week on restaurant meals in the September quarter, up $3.30 a week over the year. Women’s clothing cost $19.37 a week (up $1.41).

And with the focus on the cost of energy, the analysts found that Aussie families spent $32.85 a week on electricity (up $1.02 a week) and $16.54 on gas (up $2.35 a week.)

In addition to higher prices for a raft of goods and services, mortgage repayments are also up sharply in response to Reserve Bank rate hikes.  Canstar has noted that repayments on a $500,000 mortgage have lifted by $809 per month (around $200 a week) since May.

“The bottom line is that household budgets are already hurting. With such a significant amount of tightening in such a short space of time, Commonwealth Bank Group economists at this stage expect only one further 25 basis point rate hike in December,” noted Mr James.

“The Reserve Bank has earned a spot on the interest rate sidelines over the Christmas/New Year period. “

From an investment standpoint, softer consumer spending has implications for supermarkets as well as retailers more broadly. Expect consumers to apply more pressure on businesses through their exercise of choice, with implications for margins and profitability.

Originally published by Craig James, Chief Economist, CommSec