Half of Australians say their families are worse off than last year
Australian households held their spending flat in August, while consumer confidence fell to a four-month low, led by weaker views on personal finances, as expectations built for higher mortgage rates.
Household spending was unchanged in August 2026, according to the Australian Bureau of Statistics (ABS) Monthly Household Spending Indicator released on 29 September 2026. Meanwhile, the latest ANZ-Roy Morgan Consumer Confidence figures showed the rating fell 1.5 points to 70.5, its lowest reading since late May.
Both results landed as the Reserve Bank of Australia (RBA) met to decide on the cash rate, with markets widely expecting a cash rate rise.
Taken together, the data suggests households are absorbing higher fuel costs by pulling back elsewhere.
Fuel costs mask a pullback
The flat August result followed rises of 1.1% in July and 0.9% in June. It left spending 6.8% higher than a year earlier.
Fuel was the main support. Fuel spending rose 8.1% after the fuel excise was fully restored from 3 August, according to the ABS media release on August household spending. Without fuel, total spending would have fallen 0.3%. Discretionary spending dropped 0.3%, while non-discretionary spending rose 0.6%. New South Wales and Queensland recorded the strongest rises, at 0.3% each. Spending fell 0.5% in both the Australian Capital Territory and Tasmania.
"Recreation and culture spending saw the largest fall – down 1.4 per cent – after months of higher spending associated with major sporting events," said Tom Lay, head of business statistics at the ABS.
Household finances under pressure
The Roy Morgan survey pointed to similar strain in household budgets. Confidence overall sits 15.8 points below its level a year ago. Half of respondents said their family was worse off than a year ago, against 17% who said they were better off. Looking ahead, 43% expect to be worse off in 12 months, while just 20% expect to be better off, down 4 points in a week.
Separately, a Cotality survey found three in four Australian buyers have cut or plan to cut lifestyle spending to afford a home.
ANZ economist Sophia Angala linked the weaker mood to rate expectations.
"We expect the RBA to raise the cash rate in September and November, taking it to 4.85%, its highest level since 2008. This will likely weigh on household spending growth over the near term," Angala said.
What it means for borrowers
The cash rate currently sits at 4.35%. Further rises would typically flow through to variable mortgage rates and reduce borrowing capacity. That could hit first-home buyers and property investors who are already stretching their budgets.
For brokers, the combination of softer spending and weaker confidence points to more clients reviewing repayments, buffers, and loan structures in the months ahead.
