Quarterly states and territories chart pack: Divergence in household spending across states

September quarter states and territories chart pack

In brief

• Growth in Australian household spending has increased as inflation has moderated, real wages have risen and interest rates have been cut.
• Western Australia recorded the fastest annual growth in household spending volumes in the June quarter, at 5.2 per cent, followed by Queensland at 4.2 per cent. The weakest result was in Tasmania, where household spending fell 0.3 per cent over the year.
• Most states and territories recorded strong growth in spending on transport, while spending on the alcoholic beverages and tobacco category continued to fall in all states and territories.
• The economy is well positioned for disposable income and household spending volumes to continue to recover in line with a recent increase in consumer sentiment.
  

National household spending volumes grew by 2.4 per cent in the June quarter on an annual basis, a big improvement on the 0.8 per cent annual growth in the previous quarter. It was the healthiest reading since March 2024. The rise in household spending reflects an easing in cost of living pressures, with the moderation in inflation, interest rate decreases and increasing real wages all supporting the consumer. Alongside this, the Westpac-Melbourne Institute Consumer Sentiment Index has steadily increased over the last year and jumped 5.7 per cent in August, taking the index to 98.5, the highest it has been since February 2022.

In annual terms, all states and territories recorded stronger growth in the June quarter, compared to the March quarter, with the exception of Tasmania. Western Australia recorded the fastest annual growth in household spending, at 5.2 per cent, followed by Queensland at 4.2 per cent. Both states also recorded the highest annual wages growth of all states and territories over the year to June, up 3.7 per cent in Western Australia and 3.6 per cent in Queensland. The weakest result was in Tasmania, where household spending fell by 0.3 per cent, and wages growth was the lowest in the nation at 3.1 per cent annually. The divergence in household spending also reflects population growth – Western Australia has experienced strong population growth, in fact the highest in the nation for over two years, despite recent moderation. Population growth in Tasmania has been the lowest in the nation.

Most states and territories recorded strong growth in spending on transport, with growth in both Queensland and the Northern Territory exceeding 10 per cent over the year. Hotels, cafes and restaurants also contributed to annual growth for states following recent weakness. All states and territories experienced a large fall in the alcoholic beverages and tobacco category, which has consistently decreased over the last two years. This reflects the impact of higher alcohol and tobacco taxes by the Federal government as well as cost of living pressures. Black market sales are not captured in these data.

New South Wales (NSW) real household spending increased 1.8 per cent through the year to June 2025 quarter, which is the strongest growth rate since 2022. Hotels, cafes and restaurants recorded the largest rise, increasing by 5.5 per cent in annual terms, followed by recreation and culture, which grew by 4.5 per cent. Households cut back on alcoholic beverages and tobacco spending, which fell by 16.7 per cent in the quarter on an annual basis. Consumer sentiment in NSW has increased in recent months, signalling stronger household spending in the year ahead.

Victoria’s real household spending grew by just 0.4 per cent over the year to June 2025 quarter, continuing a run of weak readings since mid-2024 and was the second lowest growth rate of the states and territories. Household spending on food grew the most, with a rise of 4.5 per cent in annual terms. This partly reflects households choosing to cook at home more and eat out less, with only modest growth of 1.7 per cent in spending on hotels, cafes and restaurants over the year. Alcoholic beverages and tobacco recorded the weakest growth, with an annual fall of 23.3 per cent. Clothing and footwear also contributed to the weak result, with a fall of 2.8 per cent in the category over the year to the June quarter, with the category having been consistently weak for two years. Victoria’s consumer sentiment index recorded strong growth over recent months, with the index reaching 97.2 in August, close to the average of other states.

Queensland recorded a year-on-year increase in real household spending of 4.2 per cent in June 2025 quarter, the second highest in the nation. Spending on transport increased the most, growing by 10.4 per cent in annual terms, partly due to a significant increase in public transport trips in response to the government’s 50-cent public transport policy. Furnishings and household equipment also recorded strong growth of 7.3 per cent, partly due to recent strong property market activity and increasing building work. Alcoholic beverages and tobacco recorded the weakest growth, with an annual fall of 16.0 per cent. Queensland’s consumer sentiment has recently been weak, falling over the year to August.

Western Australia saw the strongest annual increase in real household spending of all states and territories at 5.2 per cent through the year to June 2025 quarter, and has now exceeded all other states for 10 consecutive quarters. This is likely linked to its high population growth and the second highest weekly wages in the country. Spending on transport increased the most, growing by 9.1 per cent in annual terms, followed by furnishings and household equipment which grew by 9.0 per cent. All categories saw strong growth, except alcoholic beverages and tobacco which fell by 16.3 per cent. Consumer sentiment in Western Australia is the second highest of the states, with the index having risen strongly over recent months.

South Australia’s real household spending experienced growth of 1.7 per cent over the year to June 2025 quarter, well below the average rate of growth over recent years. Spending on health increased the most, growing by 5.6 per cent on an annual basis, follow by recreation and culture, which grew by 5.3 per cent. Alcoholic beverages and tobacco recorded the weakest growth, with an annual fall of 17.5 per cent. Consumer sentiment in South Australia sits second lowest among the states but has risen over the year, pointing to a recovery in growth ahead.

Tasmania’s real household spending fell 0.3 per cent through the year to June 2025 quarter, the weakest growth recorded since the household spending indicator series began in September 2021, and the lowest of all states and territories. Transport recorded the largest increase in household spending, growing by 7.1 per cent on an annual basis. This was followed by furnishings and household equipment, which grew by 5.5 per cent, and recreation and culture, which grew by 4.5 per cent. Alcoholic beverages and tobacco recorded the weakest growth, with an annual fall of 25.5 per cent. Tasmania’s consumer sentiment has increased significantly over the year and was the highest of all the states in August.

The Northern Territory’s real household spending grew by 4.1 per cent through the year to June 2025 quarter, the third strongest increase of all states and territories. Spending on transport increased the most, growing by a strong 12.2 per cent in annual terms, while hotels, cafes and restaurants recorded growth of 8.1 per cent. Alcoholic beverages and tobacco recorded the weakest growth, with an annual fall of 11.1 per cent. Households also spent less on health services, which recorded a fall of 6.4 per cent.

The ACT recorded real household spending growth of 1.5 per cent in the June quarter in annual terms, a solid rebound following a fall of 0.4 per cent through the year to the March quarter. Health recorded the strongest growth, increasing by 7.0 per cent through the year to the June quarter. Households also increased their spending on recreation and culture, which recorded growth of 3.3 per cent. Alcoholic beverages and tobacco recorded the weakest growth, with an annual fall of 13.9 per cent.

Labour markets remain relatively tight, with the unemployment rate in most states and territories remaining close to record lows, despite the recent small pick up. Along with tax cuts and cost of living support, as well as lower interest rates, household disposable income is expected to rise, positioning the economy for an increase in household spending. This is reflected in the recent increase in consumer sentiment, which signals the recovery in household spending is underway, although the level of consumer sentiment still remains below the long-run average.

National Accounts data for the June quarter (to be released on 3 September) will provide more insights into the nature of the recovery.