{"id":109119,"date":"2026-02-10T11:32:00","date_gmt":"2026-02-10T00:32:00","guid":{"rendered":"https:\/\/en.econostrum.info\/au\/?p=109119"},"modified":"2026-02-09T21:02:32","modified_gmt":"2026-02-09T10:02:32","slug":"consumer-spending-slump","status":"publish","type":"post","link":"https:\/\/en.econostrum.info\/au\/consumer-spending-slump\/","title":{"rendered":"How Australia\u2019s Consumer Spending Slump Could Affect Your Wallet in 2026"},"content":{"rendered":"\n

The festive season didn\u2019t quite bring the usual surge in spending for Australian households. In December 2025, spending dropped 0.4%, following a solid 1% rise in November. It’s a shift that some economists saw coming, while others are still scratching their heads about why the figures didn\u2019t align with expectations. If you\u2019re wondering whether this signals a bigger problem for the economy, you’re not alone\u2014many are asking if rising interest rates and post-Black Friday fatigue are to blame.<\/p>\n\n\n\n

The Slowdown in Consumer Spending<\/h2>\n\n\n\n

So, what happened? Well, it seems that after the big Black Friday sales, Australians took a breather. Tom Lay, from the Australian Bureau of Statistics (ABS<\/a>), explained that the drop in December spending wasn\u2019t a surprise. Many consumers tend to bring their purchases forward during those sales events in October and November. Essentially, people splurged a little early and then took a bit of a break.<\/p>\n\n\n\n

Interestingly, clothing and footwear saw the biggest drop in December, down 2.4%. This category tends to see the biggest growth during the Black Friday period, so it makes sense that people wouldn\u2019t be buying as much in December. Likewise, sectors like furnishings, household equipment, and health also saw declines\u20141.7%, 1.3%, and 0.8% respectively. It\u2019s not that Australians weren\u2019t spending\u2014they were just picking their battles a little more carefully.<\/p>\n\n\n\n

\"spending\"
The logo of the Australian Bureau of Statistics<\/figcaption><\/figure>\n\n\n\n

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The Cash Rate and Its Impact<\/h2>\n\n\n\n

Of course, we can\u2019t ignore the cash rate. With the Reserve Bank of Australia<\/a> hiking it to 3.85%, it\u2019s definitely a factor in weaker consumer sentiment. The higher cash rate means higher borrowing costs, making people more cautious when it comes to spending. While many didn\u2019t anticipate an immediate effect, it seems the reality is starting to sink in.<\/p>\n\n\n\n

It\u2019s no secret that higher borrowing costs push Australians to think twice before splurging, especially for big-ticket items like new appliances or furniture. For people on a fixed income, like retirees or those living paycheck to paycheck, every extra cost feels like a bigger hit to the budget. And, when people feel stretched thin, they pull back on purchases.<\/p>\n\n\n\n

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\ud83c\udde6\ud83c\uddfa Household spending cools into year-end, falling 0.4%m\/m in Dec after strong gains through Oct (1.4%) and Nov (1%). #ausbiz<\/a> pic.twitter.com\/ybzTUhqmUq<\/a><\/p>— James Foster (@JFosterFM) February 9, 2026<\/a><\/blockquote>