The ABS has released the latest figures of economic growth and inflation is slowly, but finally, easing from its peak!
Inflation has dropped from 8.4 per cent for calendar 2022 to 7.4 per cent for this year. This has affected the household saving-to-income ratio which declined from 7.1 per cent to 4.5 per cent for the fifth consecutive quarter, indicating households are spending less and saving more. This fall was driven by increased interest payable on dwellings, income tax payable and increased spending during the holiday period which I think we all noticed.
GDP growth slowed to just 0.5 per cent in December according to the ABS figures which was below the expected 0.8 per cent. Despite the quarter slowdown in December, GDP has improved with annual figures coming to 2.7 per cent. Consumption is listed as the key driving factor according to ABS head of national accounts, Katherine Keenan. She stated, “Spending on discretionary services drove the rise in household consumption”, with food, cafes, restaurants and transport driving this rise.
The significant contributors to these January results were the increase in housing by 9.8 per cent, food and non-alcoholic beverages by 8.2 and recreational activities by 10.2 per cent. ABS head of price statistics, Ms Marquard said “Rents are growing more strongly than they were 12 months ago while the increases in new dwelling prices are moderating compared to a year ago”.
It can also be noted that the cost of travel and accommodation rose 17.8 per cent but down from the large 29.3 per cent growth in December. December’s growth was due to Australian’s eager desire to get traveling once borders finally open which I’m sure we can all relate to.
All in all the recent figures revealed by ABS portray the inflation rate falling, affecting saving-to-income ratios and the annual GDP rising. It is vital to know the market you are operating in and how these figures are impacting your business health or personal finances.
For more information or critical business advice, contact our experienced local accountants.
Greenhalgh Pickard’s Tax and Business Advisory team