A significant drop in real household consumption per person of 2.4% over 2023 is the headline stat from the latest National Accounts report. How does this compare to previous years, and what contributed to the fall? Challenger Chief Economist Dr Jonathan Kearns analyses the data.
The National Accounts revealed that the Australian economy grew by 1.5% over the year to December 2023. The weakness is most striking in household consumption. Real household consumption per capita fell by 2.4% over the year. Other than the sharp fall in the COVID-19 pandemic, and the fall in the Global Financial Crisis, we have to go back to the recession in the early 1960s for a similar decline in real household consumption per capita.
While aggregate nominal consumption rose by almost 5% with gross household income growing by 2.9%, strong growth in prices, interest payments, taxes and population contributed to a 2.2% fall in real disposable household income per capita and so the weak growth in real consumption per capita.
