Updated January 19th, 2024 at 10:50 IST
Down under discounts: Australians shift to bargain-driven spending
Consumers adjust spending habits in response to financial pressures fuelled by high home loan payments and the increasing cost of living.
Cost-conscious consumers: Australian consumers are increasingly adopting a cautious spending approach, choosing to make purchases primarily when attractive bargains are available. This shift in consumer behaviour comes in response to the ongoing financial pressures stemming from high home loan payments and the escalating cost of living, as indicated by data from Westpac.
Dining, travel decline
The Westpac Card Tracker Index, registering at 137.2 for the week ending Jan. 13, reflects a 3-point increase from mid-December. However, the quarterly analysis shows a decrease in spending, particularly in sectors such as travel and dining out. The index, with a base of 100 reflecting average 2019 activity, suggests a fluctuating pattern during the Christmas-New Year period, signifying consumers actively seeking discounts to address the challenges posed by the cost of living.
Matthew Hassan, a senior economist at Westpac, highlighted, "The Christmas-New Year period has been a sporadic one for consumer-related card activity with bursts around key sales weeks followed by sharp pull-backs." This observation aligns with the broader trend of consumers strategically seeking out discounts amidst economic pressures.
Black Friday boost
In a separate report, ANZ data revealed a notable seasonal increase in non-food retail spending in the final quarter of the year, attributed to the growing popularity of Black Friday sales. However, the overall spending levels remained subdued. The official retail sales figures, scheduled for release on Jan. 30, are expected to indicate a softening in consumer spending following a surge in November.
This anticipated decline in spending reinforces market expectations that the Reserve Bank of Australia may not implement further rate hikes in February. Major Australian banks, including Commonwealth Bank of Australia and Westpac, have already called a peak in interest rates. Predictions from NAB and ANZ suggest that the first rate cut could occur in September, with a consensus forming around a potential cut in November.
ANZ analysts anticipate a supportive environment for spending in the second half of the year, driven by a combination of fiscal easing, slower inflation, and a projected rate cut in November.
(With Reuters Inputs)
Published January 19th, 2024 at 10:50 IST