The underlying pace of Australia's consumer spending growth is expected to soften, but a drop similar to December 2025 is not anticipated in January, said ANZ in a Monday report

In volume terms, household spending rose 0.9% in the December 2025 quarter. Annual growth lifted to 2.4%, the fastest pace since the second quarter of 2023, which suggests a solid gross domestic product contribution from household final consumption expenditure in the fourth-quarter national accounts, ANZ added.

The bank added that consumer confidence has remained subdued through 2026 to date, and the Reserve Bank of Australia's (RBA) decision last week to lift the cash rate to 3.85% will likely weigh further on sentiment.

ANZ expects growth in real household disposable income to slow, which should translate into a softer consumer spending trend over 2026, and such softening in spending and a slowing in inflation will likely be needed to see the RBA keep the cash rate at 3.85%.