Australians have been frantically booking overseas holidays since international borders were reopened, with spending eclipsing pre-pandemic levels.
National Australia Bank data shows their customers spent $46 million in internationals flights, accommodation, car rentals, cruises, trains and travel agents in May, the largest monthly spend in three years.
In comparison, customers spent $43 million on international travel plans in May 2019.
“For many Australians it has been two years without international holidays, visiting overseas family and celebrating major milestones like weddings,” NAB’s Paul Riley says.
Between January 1 and May 31, NAB customers spent $157 million on overseas travel compared with $23 million in the same period last year.
However, rising cost of living pressures and higher interest rates look set to curb consumers desire to spend, with a separate report predicting a slowdown in retail activity from the second half of this year.
In its quarterly Retail Forecasts report, Deloitte Access Economics believes the majority of retail turnover growth over the next few years is likely to be driven by prices rather than volumes.
It forecasts retail turnover growth slowing from 3.4 per cent in 2022/23 to 0.8 per cent in 2023/24, then slowly recovering to 1.2 per cent and 1.8 per cent in the following two financial years.
Spending on non-discretionary goods and services like fuel, housing and health is less likely to be reduced by households, placing significant pressure on other components of spending.
However Deloitte Access Economics partner David Rumbens says there are encouraging signs in relation to lower shipping costs.
“For now though, businesses may need to look to ways to lower costs and reduce disruptions to operations to avoid losing competitiveness,” Mr Rumbens said.
This could involve diversifying and building more resilient supply chains.
“With wage pressures high, businesses may need to maximise staff retention as much as possible through investment in the likes of training, talent pipelines and automation,” he said.
Overall, Mr Rumbens says the cost of living squeeze, higher interest rates and preference for spending on services are expected to lead to a slowdown in retail momentum through the second half of 2022.
This may result retail spending falling over 2023 and 2024.
“That means the speed of return of net migration will become a significant driver of retail’s future growth prospects,” he said.
Meanwhile, the Australian Institute of Petroleum will release its weekly petrol price report later on Monday.
Last week the Australian Competition and Consumer Commission said the cut in fuel excise in the March budget saw petrol prices fall 39 cents per litre in the nation’s five largest capital cities.
However this will come as little comfort for motorists with prices back around the $2 per litre level again and eating into household budgets
This is due to global oil pressures stemming from the Russia’s war in Ukraine.
The national average for petrol prices rose 2.1 cents in the week ending June 12 to 199 cents per litre but Victoria, South Australia, the Northern Territory, Tasmania and Canberra were all paying above $2.
