Australia household spending rises for third straight month in Dec

SYDNEY (Reuters) - Australian household spending rose for a third straight month in December due to higher discretionary spend, data showed on Tuesday, suggesting consumption is picking up after a long fallow period.

The Australian Bureau of Statistics' monthly household spending indicator (MHSI) showed a seasonally adjusted rise of 0.4% in December from November, when it rose by an upwardly revised 0.8%.

Annual growth picked up to 4.3%, the highest since March 2024.

"The growth in December was driven by new vehicle purchases, dining out, air travel and streaming services," said Robert Ewing, ABS head of business statistics.

"Continued strength in clothing and footwear, furnishings and household equipment, and goods for recreation and culture also contributed to higher discretionary spending."

The data is not expected to sway expectations for a rate cut later this month, which is almost fully priced in by traders after a surprisingly soft inflation report opened the door for the Reserve Bank of Australia to deliver its first rate cut in four years.

Consumer spending should add around 0.2 percentage points to gross domestic product in the fourth quarter, a small but vital contribution to economic growth which had been flatlining under the burden of high mortgage rates and cost-of-living pressures.

The MHSI series will replace the current retail sales report from the middle of this year and is much broader in scope covering 68% of household consumption, more than double the retail survey.

It includes spending on many services and should offer a better guide on what to expect from household consumption in the gross domestic product (GDP) report.

(Reporting by Stella Qiu; Editing by Jacqueline Wong)