Insights into household consumption, December quarter 2020

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Released
3/03/2021
Source
Australian National Accounts: National Income, Expenditure and Product, December 2020

Household consumption increased 4.3% in the December quarter, following the record rise of 7.9% in the September quarter. Easing of COVID-19 restrictions and growing confidence in public health outcomes increased household spending across all of Australia. Despite the rises, household consumption was still down 2.7% through the year, only partially recovering from the unprecedented falls seen in the June quarter.  

Household consumption by state and territory

Victoria emerged from its stage 4 restrictions in the December quarter which resulted in a boost to household consumption. Household consumption in Victoria rose 10.4% which was comparable to the 10.9% rise recorded for the rest of Australia when restrictions in those states were eased in the September quarter.

The continued easing of COVID-19 restrictions across other states and territories resulted in a 2.3% rise in total household consumption, excluding Victoria.

Further insights into the changing nature of COVID-19 health measures across Australia are available in the spotlight article State economies and the stringency of COVID-19 containment measures.

Household consumption by goods and services

The increase in household spending in the December quarter was evident across both services, which increased 5.2% and goods, which increased 2.8%.

The ongoing recovery in spending on hotels, cafes and restaurants (17.5%) and recreation and culture (9.1%) drove overall household consumption growth, particularly as Victoria moved out of stage 4 restrictions.

Spending on discretionary services remained subdued through the year, driven by weakness in transport services (-78.1%) and hotels, cafes and restaurants (-29.8%). COVID-19 travel restrictions as well as capacity limits for hospitality venues, public events and office attendance continued to impact these individual categories.

Household consumption on goods remained robust and was supported by the increased preference to shop online since the outbreak of COVID-19 – Shopping online and in person. Online sales events such as Black Friday in late November also boosted household spending on goods in the December quarter.

Purchase of vehicles increased 31.8% in the December quarter, the largest rise in the history of the national accounts. The increase was in part driven by continued restrictions on international travel which led to a shift in households spending on domestic holiday travel.

Annual household consumption patterns

Australia recorded its first case of COVID-19 in late January 2020, and the evolving nature of the global pandemic has led to changes in household spending patterns throughout the 2020 calendar year.

In response to restrictions and closures to parts of the hospitality industry, households have increased the share of spending on food and alcohol consumed at home.

The closure of international and domestic borders, along with increased work, and leisure, at home has led to a reduction in spending on transport and increased spending on furnishings and household equipment.

Restrictions on recreation and cultural services such as sporting competitions, cinemas and concerts, have resulted in households spending more on goods such as audio-visual, camping and sporting equipment.