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AVERAGE HOUSEHOLD SPENDING
Graph 1 - AVERAGE WEEKLY HOUSEHOLD SPENDING ON GOODS AND SERVICES, 2015-16
Source(s): Household Expenditure Survey, 2015-16
CHANGES IN HOUSEHOLD SPENDING OVER TIME
Household spending data does not easily capture people's response to prices increasing or decreasing. It is not possible, for example, to distinguish between changes in household spending due to a decrease in purchasing power (a higher value dollar) or where households choose to buy alternative, cheaper products — thereby not increasing their spending. It is also not possible to capture phenomenon such as 'shrinkflation', where the package size and physical weight of a product is reduced by the manufacturer, but the price remains constant. In the case of 'shrinkflation', the price rise and increase in inflation is effectively masked.
Comparing average household spending in 2015-16 with previous surveys run in 1984 and 2009-10 gives a long and short term indication of how household spending in Australia has changed over time. Without adjusting for inflation, average weekly household spending on goods and services increased by 15% from 2009-10 and almost tripled from 1984.
Part of the increase in household spending over the 31 years from 1984 can be attributed to inflation, as the price of goods and services as measured by the consumer price index (CPI) almost doubled during this period. Likewise, there was alignment between the increase in household spending over the 6 years to June 2016 and inflation, as the CPI rose by 14%. However, it should be noted that while the CPI measures the change over time in the price of goods and services, it does not cover all spending categories equally and the impact of inflation varies across the different spending classes.
Changes to the demographic profile of the Australian population will also impact how much households spend per week, and what they spend their money on. Since 1984, the average age of the household reference person has increased from 47 years, to 50 years in 2009-10, and to 51 years in 2015-16. The proportion of owner households without a mortgage decreased from 39% in 1984, to 33% in 2009-10, and to 30% in 2015-16. The proportion of couple families with dependent children decreased from 36% in 1984 to 28% in 2015-16, while the proportion of lone person households increased from 19% in 1984 to 25% in 2009-10 and 2015-16.
COMPOSITION OF HOUSEHOLD SPENDING
As a proportion of their weekly spending, household in 2015-16 spent significantly more on 4 of the 15 broad spending categories when compared to households in 2009-10. These were current housing costs, education, household services and operation (such as child care services, cleaning products and pest control), and domestic fuel and power costs such as gas and electricity.
Correspondingly, while the share of weekly spending increased in some spending categories, the share of weekly spending in other categories decreased. Compared to households in 2009-10, households in 2015-16 spent less on transport, household furnishings and equipment (such as furniture and appliances), alcoholic beverages and communication (including equipment and usage charges). Over this same period the proportion of weekly expenditure spent on food and non-alcoholic beverages, tobacco products, medical care and health expenses, recreation (such as hobbies, holidays and pets), personal care and miscellaneous goods and services remained relatively stable.
Taking a longer term view of household spending, in the 31 years from 1984 to 2015-16, households have tended to spend proportionally more per week on current housing costs, education, medical care and health expenses, communication, household services and operation, miscellaneous goods and services, personal care and recreation. Correspondingly, when compared to households in 1984, households in 2015-16 tended to spend less on household furnishings and equipment, clothing and footwear, food and non-alcoholic beverages, alcoholic beverages, transport and tobacco products.
Graph 2 - PROPORTION OF WEEKLY HOUSEHOLD SPENDING ON GOODS AND SERVICES, 1984, 2009-10 and 2015-16
Source(s): Household Expenditure Survey, various years
Household spending on education showed the largest percentage increase between 2009-10 and 2015-16, increasing 44% from $31 per week to $44. Weekly spending on government, catholic and independent primary and secondary tuition fees all significantly increased over the period. As did household spending on tertiary education fees, which increased by 30% from $11 to $14 per week.
Household spending on education also saw the largest percentage increase in the 31 years 1984 to 2015-16, increasing by 13 times from $3 to $44 per week. Weekly spending on fees for primary and secondary school increased by 11 times, from less than $3 per week to $29. In 1984, prior to the re-introduction of fees for university study, households typically spent less than $1 per week on tertiary and other education fees. This increased by 22 times to $15 per week in 2015-16.
BASIC AND DISCRETIONARY SPENDING
Household spending on goods and services can also be conceptualised as either 'basic' or 'discretionary' spending. Basic spending covers the key groups of items considered essential to living (housing, food, fuel and power, medical and health care, and transport), while ‘discretionary’ spending includes all other items.
In terms of dollars spent, without adjusting for inflation, average household expenditure on basics increased by $645 over the last 31 years, from $201 per week in 1984, to $718 in 2009-10, and to $846 in 2015-16. Over the same period, discretionary spending also increased, although at a slightly lower rate, from $161 per week in 1984, to $518 in 2009-10, and to $579 in 2015-16 (an increase of $418 since 1984).
Since 1984, the share of household spending going towards basic goods and services has tended to increase, while households have tended to spend less on discretionary goods and services. In 1984, basic goods and services expenditure accounted for 56% of household spending on goods and services, in 2009-10 it accounted for 58%, and in 2015-16 basic expenditure accounted for 59% of household spending.
Graph 3 - PROPORTION OF WEEKLY HOUSEHOLD SPENDING ON BASIC AND DISCRETIONARY GOODS AND SERVICES, 1984 to 2015-16
Source(s): Household Expenditure Survey, various years
Additional analysis on the changes in household spending over time is available in "Household Characteristics and Spending" and the “Income, Wealth and Expenditure over time” article, available in this release.
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