ABS data shows Australian consumers on a pre-emptive splurge – piling pressure on the Reserve Bank to hold or hike as it meets today
Australian household spending roared back in March, surging 6.7% in the year to March 2026 — the strongest annual growth rate since mid-2023 – in a fresh blow to anyone hoping the Reserve Bank of Australia (RBA) will deliver rate relief today.
New data from the Australian Bureau of Statistics, released today, shows seasonally adjusted household spending rose 1.6% in March alone, the sharpest single-month jump since October 2025, to a record $80.4 billion. The figures land just hours before the RBA's Monetary Policy Board announces its cash rate decision at 2:30pm AEST, having already lifted the rate to 4.1% at its last meeting in March.
The headline numbers
The March data reveals broad-based acceleration across the economy:
- Total household spending (seasonally adjusted): $80.41 billion — up 1.6% on February, and 6.3% year-on-year
- Goods spending: up 2.9% in the month, and 5.8% through the year
- Services spending: up 0.1% in the month, and 6.9% through the year
- Discretionary spending: up 0.6% in the month and 5.3% through the year
- Non-discretionary spending: the standout, surging 3.4% in a single month and 8.1% through the year
That non-discretionary surge – covering essentials like food, housing costs, utilities and healthcare – is the number that will most unsettle the RBA. When households are spending more on items they can't avoid, it suggests cost pressures are becoming entrenched rather than easing.
Why this matters for rates
The RBA's last rate decision in March was decided by a razor-thin 5-4 majority in favour of a 25-basis-point hike. Its statement cited "greater capacity pressures" and noted that private demand had "strengthened substantially more than was expected in mid-2025."
Today's ABS data pours fuel on that narrative.
The through-the-year pace of 6.3% in seasonally adjusted terms is an acceleration from 4.7% in both January and February – running well above the RBA's inflation target band of 2–3%. What's more, it represents a clear step-up from the 4.5%–5.9% range that prevailed through most of the second half of 2025.
Markets and the major banks will be watching closely. As of late April, interest rate futures implied roughly a 60% probability of a hold at 4.1%, with a 25% chance of a further hike to 4.35%. Those odds may now shift.
The housing angle
For Australia's embattled mortgage holders, the picture is deeply uncomfortable.
Discretionary spending – which includes categories like home furnishings, appliances and renovation activity – is running 5.3% above year-ago levels. But the big signal for housing is in the non-discretionary basket: the 8.1% annual rise suggests households are absorbing significantly higher housing-related costs, consistent with elevated rents, insurance premiums and utility bills continuing to bite.
At the same time, this consumer resilience gives the RBA confidence that the economy can withstand further tightening. As one market economist noted last week, "you can't simultaneously argue that households are under extreme mortgage stress and that spending is accelerating. The data keeps picking one answer."
The RBA's own statement in March acknowledged that "the effects of interest rate reductions in 2025 are yet to flow through fully to aggregate demand." That caveat is looking increasingly stale: the spend data suggests consumers have absorbed earlier cuts and are now spending freely.
What to watch at 2:30pm
The ABS figures provide cover for the board's hawks. The three factors the RBA flagged in March – capacity pressures, labour market tightness and above-target inflation – all look more acute today, not less.
However, the board's doves will point to the composition of the March jump. The single-month surge of 1.6% in seasonally adjusted total spending partly reflects the post-summer seasonal pattern and a late Easter effect in retail goods. Goods spending, in particular, can be lumpy month-to-month.
The more telling signal may be the trend series: the ABS trend estimate shows spending growing at a steady 0.2–0.5% per month – a grinding acceleration that is harder to dismiss as noise.
For Australian homeowners with a variable rate mortgage, the next 90 minutes will be defining. A further 25-basis-point hike would add approximately $91 per month to repayments on a $600,000 loan.
