Australian consumer spending on discretionary categories rose 2.4% in May, supported by stronger travel, hospitality and other discretionary services.
According to the latest NAB Consumer Spend Trend report, total spending rose 1.1% in May, rebounding from an April pullback, and was 6.5% higher over the year. Excluding fuel, spending rose 1.6% in the month and 6.6% over the year.
Cafe and restaurant spending rose 2.9% in May to be 7.6 per cent higher over the year.
NAB said the strength in May suggests households continued to spend on eating out and related hospitality services despite broader cost-of-living pressures.
NAB Head of Australian Economics Gareth Spence said: “Consumer spending rebounded in May and remains positive over the year, suggesting household demand has been resilient despite ongoing cost pressures,” Spence said.
“The monthly lift was supported by a recovery in discretionary spending, including travel, hospitality and other services.”
“While spending growth has slowed from the pace seen late last year, the data suggest households have not pulled back sharply.”
Aussies won’t give up their speciality drinks
NAB data shows spending at cafés, restaurants and pubs rose 7.6% over the past year, with hospitality accounting for one in every $10 spent.
Growth is holding despite rising costs, wage pressures and tighter budgets, with operators moving quickly to win more selective spending and turn it into repeat business.
Western Australia recorded the strongest growth, up 8.5% year on year, followed by the Northern Territory at 7.8%. New South Wales and the ACT both lifted 7.1%.
NAB Head of Small Business Victoria Dario Medugorac said customers are still spending, but more deliberately.
“Australians are still finding room for cafés and restaurants, even as budgets tighten,” he said.
“What we are seeing is more selective spending, and businesses that move quickly are the ones winning it.”
Café and restaurant spending rose 2.9% in May, outpacing overall consumer spending, which increased 1.1%. Operators say it comes down to speed, consistency and giving customers a reason to treat themselves.
Axil Coffee founder Dave Makin said the basics matter more than ever.
“People still want a small treat, even in tougher times,” he said.
“That means nailing the essentials: good coffee and quick service from the moment someone sits down.”
But extras can help drive growth. Axil has leaned into specialty drinks, including Mont Blancs, a cold brew coffee topped with cream and, traditionally, orange zest and nutmeg, selling hundreds each day across its 18 locations.
“Mont Blancs are the biggest thing we have seen since smashed avocado,” Mr Makin said.
“It taps into that idea of affordable luxury. Customers understand what they are paying for, and they keep coming back.”
The group has also ramped up partnerships and pop-ups, including a limited-edition blend tied to the Audi Revolut Formula 1 team and expansion support for Brisbane café The Hideout Specialty Coffee.
Cafe Carlton sells five speciality drinks, like crème brûlée matcha, Earl Grey matcha and blueberry matcha, for every one traditional coffee drink like a flat white.
Owner Mert Sengul said trends go from viral to in-store within days.
“With most of our customers under 30, you have to move fast,” he said.
“We saw the New York dot cake take off online on a weekend, made it on Monday and were selling it Tuesday.
“If you don’t act, you miss it.”
Pictured main: Wine lovers share a toast at Printhie Wines, Orange NSW.