Staples are becoming cheaper...
Milk (2 litres) down 3c $3.69
Bread (sliced loaf) down 4c $3.78
Eggs (dozen) down 7c $3.37
Cheese (500g) down 15c $5.22
Baked beans (420g) down 4c $1.61
Petrol (litre, unleaded) down 5c $1.22
...so we are dining out on the money we save
Spending at restaurants: up 7.5%
Spending on takeaway: up 3.5%
This will come as news to politicians who campaigned about the price of bread, but it is now falling - as is the price of milk, eggs, cheese, potatoes, baked beans... in fact just about all of the staples, including petrol.
A new Bureau of Statistics survey shows the Sydney price of a sliced white loaf slid 4 cents in the September quarter, a dozen eggs 7 cents, 500 grams of cheese 7 cents, and so on.
The breaking of the drought can take much of the credit, as can the higher dollar which yesterday spent its first full day above $1 US closing at $US1.0045.
But ominously for retailers already unsettled by the Reserve Bank's interest rate hike, we are not buying more as a result.
Estimates of retail volumes released by the Bureau show we bought less food, fewer household goods, fewer clothes and less from department stores in the September quarter, reserving our splurges for food prepared away from the home...
Spending on NSW restaurants jumped an extraordinary 7.5 per cent in the quarter. Spending on takeaway food jumped 3.5 per cent.
"We are cautious, but starting to treat ourselves," said ANZ economist Riki Polygenis. "However when we do spend more on things such as meals out we do it at the expense of other spending."
Our careful approach to spending is confounding economists and the Reserve Bank. In the past year an extra 360,000 of us have found jobs. The population has grown 403,000.
When asked in the recent Westpac survey whether now was a good time to buy a major household item an astonishing 63.5 per cent of us said yes - the highest proportion since 2005.
The Reserve Bank distrusts both the retail and inflation figures. It believes that more and more of our spending is taking place away from the shops monitored by the Bureau. A move to on-line buying as a result of the dollar would accentuate the trend.
And it believes our low inflation won't last, noting in Tuesday's announcement of its rate hike that the deflation in food prices was "unusual" and likely to be reversed.
Other figures released yesterday lend support to the view that we are economising on essentials while splurging on luxuries.
Motorcar sales were virtually flat in the year to October, up a mere 0.1 per cent, but within the total sales of four-wheel drives surged 23 per cent as sales of other vehicles slid 3 per cent.
In the September quarter inflation-adjusted spending on sporting goods, toys and video games jumped 8 per cent, spending on flowers jumped 3 per cent.
It paints a picture of fragile consumption, easily wound back should extra mortgage payments bite.
Reserve Bank forecasts to be released today (FRI) are expected to forecast continued robust consumption and a resurgence of inflation down the track.
International trade data released yesterday pointed to still more money flooding into the country with Australia recording its sixth consecutive trade surplus in September as export income exceeded import spending by $1.76 billion.
Although down 2 per cent in the month, export income climbed 19 per cent in the year to September.
Published in today's SMH and Age
. Debate notes: What if they had used their loaves?
. Ring the tills. Steady rates, low prices, so many more consumers...
. We're about to hit the shops?
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