ANZ Data Show Weak Goods Spending But Strong Services

Spending fell 5% y/y in the week to January 21 according to data from ANZ. It appears that the higher cost of living and less pent up demand drove a drop in spending on discretionary goods in January.

• The data show that the post-tightening adjustment in household spending may have begun in January as expected but also that the shift to services in the post-Covid environment continued. While the RBA will want to see some heat taken out of the economy, it is likely to be monitoring that the adjustment doesn’t go too far.
• Non-food shopping fell 11.9%y/y while groceries fell 3.9% y/y. However, discretionary services spending rose with entertainment up 37% y/y, travel +20.1% y/y and dining/takeaway +3.8% y/y.