Cost of living hitting restaurant turnover as eateries take a hit

After experiencing solid growth through much of the past 18 months after pandemic-related restrictions eased, Australian Bureau of Statistics figures show spending on accommodation and food services has been falling from its April peak.

According to the ABS, turnover slipped 0.5 per cent lower in May before dropping 2.6 per cent in June - a fall of more than 3 per cent. The result is mirrored in a similar slowdown in the bureau's measure of household spending at hotels, restaurants and cafes, which climbed strongly during the second half of 2022. It peaked in December and has since declined.

The weakness is apparent in other areas of household expenditure including retail, where turnover fell 1.8 per cent in June, and in the market for cars.

Figures compiled by the Federal Chamber of Automotive Industries show 97,000 new vehicles were delivered in July, up almost 15 per cent from a year earlier.

But Deloitte Access Economics senior partner David Rumbens warned the strong result disguised an underlying weakness in the market.

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Mr Rumbens said pandemic-related disruptions to supply chains had caused significant delays of more than 150 days in new car deliveries, meaning that many of those arriving last month had been bought and paid for late last year or early this year.

"Given that consumer spending has weakened substantially in 2023, it is very unlikely that sales will remain at this level once backorders are filled," he said.

Sales of new vehicles typically suffer an "exaggerated fall" in demand during economic downturns, Deloitte economist said, predicting registration may fall in the next three quarters.