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Australians have been war-spooked into changing their spending patterns as they grapple with higher fuel prices and rising expectations for inflation.<\/p>\n
Discretionary spending took a hit in March \u2013 a month when we saw a spike in the hoarding of canned food and 161 per cent surge in loans to buy electric vehicles.<\/p>\n
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Stocking up on pantry items is becoming more commonplace as the war in Iran rolls on.<\/p>\n
While we have not seen any meaningful decline in the quantity of spending, its composition has moved around, with a proportionately higher amount going to fuel and cost-of-living categories.<\/p>\n
Consumers are adopting a bunker mentality \u2013 reflecting their uncertainty about the supply and price of petrol, how this will feed into prices at the supermarket checkout, and how higher interest rates will feed into the value of their homes.<\/p>\n
In Sydney and Melbourne, house prices have been falling as a high volume of auctions have been met with falling auction clearance rates.<\/p>\n
A recent report from UBS suggests people are becoming more reliant on help from their families \u2013 generally known as the bank of mum and dad \u2013 for cost-of-living expenses.<\/p>\n
In the absence of clarity Australia\u2019s consumer is bracing for a negative impact.<\/p>\n
The immediate brunt of a slowdown in discretionary spending is showing through in holiday travel and eating out. But it also represents poor news for retailers of apparel and department stores that had begun to see positive momentum before the Iran conflict.<\/p>\n
Expectations for higher interest rates have increased, in part because of the war\u2019s effect on inflation and in part because the Reserve Bank had warned inflation was already growing.<\/p>\n
The National Australia Bank says there is evidence that consumers are leaning ever harder into loyalty programs and buying at retail sales rather than full-price items. And last week our largest road toll operator, Transurban, reported some major roads had experienced a drop in traffic in response to saving on petrol.<\/p>\n
Editor’s pick While some consumer behaviour may seem irrational, it reflects a degree of panic that surrounds a war around of which we have no visibility.<\/p>\n The consensus is that even if the war finishes over the next few weeks, the oil price will remain elevated for months and will continue to feed into inflation.<\/p>\n But intelligence which is largely provided by Trump\u2019s social media posts have been so rapid and conflicting that they further cloud the horizon and promote anxiety among consumers.<\/p>\n Last week the world collectively exhaled as a two-week cease fire was entered into by the US and Iran. This week those peace talks \u2013 that looked shaky within hours of being agreed \u2013 appeared to fall apart.<\/p>\n At the time of writing Trump has imposed a new deadline, after which he says the US will blockade the Strait of Hormuz to force Iran into listing its own blockade.<\/p>\n The hard-headed investment pragmatists that are forecasting that a peace deal will ultimately be achieved because it is in neither party\u2019s economic interest for it to continue, are being sorely tested. And so are US shoppers, with consumer sentiment reportedly dropping to a record low recently.<\/p>\n The stock market optimism of last week has given way to uncertainty, Asian markets, including the Australian index, fell and US futures markets braced for a negative night. In the absence of clarity Australia\u2019s consumer is bracing for a negative impact.<\/p>\n The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning<\/a>.<\/p>\n Save<\/p>\n You have reached your maximum number of saved items.<\/p>\n![\"David](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/04\/2d7702d4b14a59b5bbbffd14815fd1881fbfb9a0.jpeg\")
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