Chart of the week: Weak expenditure and weak consumers

Published on 24 June 2024

Last week’s GDP numbers showed a prevalent shift in consumer spending patterns. As imports of low value goods were up 20% on the quarter while chunkier imports fell.

Mary-jo-vegara-profile

Mary Jo Vergara

Senior Economist

Sabrina Delgado

Sabrina Delgado

Economist

jarrod_kerr

Jarrod Kerr

Chief Economist

GDP Expenditure March24

The sharp and saddening shift in consumer spending was on display in last week’s numbers. Big ticket imports are down, and low value imports are up. There was a 1.3% decline in the consumption of durables over the quarter. And on an annual basis, spend on durables declined 2.7%.

Households are being forced to substitute away from large purchases and luxury goods, to meet the growing cost of essentials. Household spending declined for the sixth-straight quarter. High inflation, steep interest rates and weak house prices are weighing on consumption.

Consumption on services however accelerated at the start of 2024, with a 0.5% increase. However, on an annual basis, spend on services is broadly in decline, and points to some moderation in services inflation in the coming quarters.