Cost of living Australia: GDP growth slumps to 1.5pc as households cut back

Already a subscriber?Annual economic growth slowed sharply in December as households cut back on non-essential activities like dining out and buying new clothes.

The outcome led the annual rate of growth to slow to 1.5 per cent from 2.1 per cent. Outside the pandemic, it was the lowest rate of growth since 2000, when the dotcom crash caused a sharp slowdown in economic activity. The ABS attributed the rise to an increase in government payments like JobSeeker and a fall in income tax paid after a sharp rise in September.

Real per capita consumption fell 2.4 per cent over the past 12 months, as households slashed spending on non-essentials like clothes, cars and dining out.polling consistently showsThe question for economists is how well-placed households are to cope with falling disposable incomes, after accumulating more than $200 billion in excess savings during the pandemic.While income taxes fell in December, they consumed a record share of household budgets over the past 12 months, at 16.

Unit labour costs – the difference between wages and productivity – increased by 6.5 per cent in the 12 months to December, well above the 3 per cent limit the RBA has previously said was necessary to engineer a return to the 2 per cent to 3 per cent inflation target.and a large fall in imports of consumer goods like toys, clothes, cars and appliances.

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