Australian Household Spending Surges 1.3% in October 2025, Driven by Discretionary Purchases and Hospitality

Significant Uptick in Australian Household Spending

Australian household spending experienced a notable upswing in October 2025, climbing by 1.3 percent on a month-on-month, seasonally adjusted basis. This marks the most substantial increase recorded since January 2024, according to recent figures released by the Australian Bureau of Statistics (ABS). The surge exceeded economists' expectations, who had anticipated a 0.6 percent gain. Overall household expenditure is now 5.6 percent higher compared to the same period in the previous year.

Discretionary Spending Leads the Charge

The primary driver behind this significant increase was a surge in discretionary spending, particularly on goods. Tom Lay, head of business statistics at the ABS, noted that 'promotional events saw households spend more on clothing, footwear, furnishings and electronics following months of weaker spending in these categories.' Key categories that saw the largest percentage increases include:

• Clothing and footwear (+3.5%)
• Furnishings and household equipment (+3.0%)

This indicates a renewed willingness among consumers to engage in non-essential purchases, potentially influenced by seasonal sales and marketing efforts.

Hospitality Sector Shows Strong Growth

Alongside discretionary goods, the hospitality sector also contributed significantly to the overall spending increase. Services spending, which includes hospitality, rose, with hotels, cafes, and restaurants experiencing a 2.2 percent increase. Mr. Lay highlighted that 'Services spending also rose in October, as major concerts and cultural festivals drove up demand for catering, hospitality and hotel stays in major cities.' Services spending was 6.4 percent higher in October 2025 compared to October 2024.

Broad-Based Growth Across Categories and Regions

The positive trend was broad-based, with all nine spending categories tracked by the ABS recording an increase in October. Other notable rises included Recreation and culture (+1.5%) and Health (+0.9%). Geographically, spending grew in seven of Australia's eight states and territories. New South Wales (+1.6%) and Queensland (+1.5%) recorded the largest percentage rises, while Tasmania was the only state to see a slight decrease of -0.1 percent.

Economic Implications and Outlook

This stronger-than-expected household spending data has drawn attention from economic analysts and the Reserve Bank of Australia (RBA). The robust figures have led to increased speculation regarding potential interest rate adjustments, with some market traders boosting bets for a rate hike in the coming year. RBA Governor Michele Bullock has previously indicated that the central bank is closely monitoring inflation pressures, acknowledging that recent lifts in inflation have been a surprise. While the October surge reflects a positive shift in consumer behavior, some analysts suggest that the impact of promotional events might mean this level of increase may not be sustained in subsequent months.