Australian household spending rose 0.8% in June 2026, supported by stronger discretionary expenditure on new vehicles, air travel, electronic goods and entertainment, according to the Australian Bureau of Statistics (ABS).
The seasonally adjusted increase followed a 1.2% rise in May and a 1.0% decline in April.
Discretionary spending climbed 1.2% for a second consecutive month, while spending volumes increased 0.7% over the June quarter and were 2.4% higher than a year earlier.
Vehicle sales drive transport spending
ABS head of business statistics Tom Lay said transport and recreation and culture were the main drivers of the monthly increase.
“The 0.8% rise in June was driven by discretionary spending rising for the second month in a row at 1.2%, thanks to continued strength in transport and recreation and culture,” Lay said.
New vehicle sales were the standout contributor, lifting transport spending by 3.0%.
Electric vehicle sales also increased strongly over the year and continued to gain market share in June as households adjusted their spending in response to elevated fuel prices.
Air travel was the second-largest contributor to transport spending, returning to levels recorded before travel disruptions associated with the Middle East conflict that began in March 2026.
Lower prices lift fuel volumes
Fuel expenditure eased from its March peak as global oil prices declined and the temporary reduction in fuel excise duty continued to flow through to households.
Experimental ABS data showed the volume of fuel purchased increased by 7.8% in June as prices fell by 10.9%. This followed a 0.2% increase in fuel volumes in May.
Recreation and culture spending rose 1.4%, reflecting increased expenditure on electronic goods, performing arts, live entertainment and gambling activity, which was likely supported by major sporting events.
The ABS noted that some performing arts and entertainment spending represented advance ticket purchases for future events, with expenditure recorded when payment was made rather than when the service was consumed.
Discretionary categories lead quarterly growth
Household spending volumes increased by 0.7% during the June quarter, marking the third consecutive quarterly rise.
Growth was led by discretionary categories including alcoholic beverages and tobacco, recreation and culture, furnishings and household equipment, and hotels, cafés and restaurants.
Spending volumes were 2.4% higher than in the June 2025 quarter, although annual growth eased slightly from the 2.7% increase recorded in the March quarter.
Small businesses missing out, Xero says
Xero economist Louise Southall said the strength in discretionary spending was surprising given continuing cost-of-living pressures.
“It’s surprising to see the ABS data showing discretionary spending rose at a higher rate than spending on essentials,” Southall said.
“With the ongoing cost-of-living pressures, we’d expect budgets to be skewed towards the expenses that can’t be avoided like mortgages, rent and fuel.”
Xero Small Business Insights data showed small business sales increased 6.5% year-on-year during the June quarter, but discretionary sectors including retail, hospitality, arts and recreation recorded the weakest sales growth.
Southall said this suggested households were directing more discretionary expenditure toward larger businesses at the expense of smaller operators.
Xero estimated that redirecting 10% of household expenditure from large businesses to small businesses could inject an additional $76 billion into Australia’s small business economy.
Australia has more than 2.7 million small businesses employing over five million people.
“Every purchase from a small business is an investment in local families, jobs and communities,” Southall said.