The September figure continues the strong pace of spending growth since March, according to the latest CommBank Household Spending Insights (HSI) Index.
The uptick followed the first Reserve Bank cash rate for four years in February and has likely been fuelled by further interest rate cuts in May and August.
Moderating inflation, tax cuts, and steady household confidence have also played a part.
Annual spending growth has now reached 7.5% for the year, its strongest figure since May 2023, indicating a more upbeat consumer outlook.
Digital, utilities spending leads the charge
Spending on online gaming has ballooned a massive 38% over the past year while it seems video streaming services are back in the household budget, seeing a 31% increase in spending in 12 months.
CommBank analysts say streaming hits such as 'The Summer I Turned Pretty' and new tech releases, including the iPhone 17, boosted spending in the Communications & Digital category by 1.1% in the month.
Spending at computer stores generally has risen a considerable 21% over the past year.
CommBank head of Australian economics Belinda Allen said the data shows a lean into at-home entertainment with digital spending now a structural feature of household budgets, not a passing trend.
Spending on utilities is also back on the rise, up 1.4%, as various federal and state government energy subsidies run their course.
The annual growth rate for utilities spending is now at 6.4% for the year.
September also saw increased spending on health (up 1%), insurance (+0.8%), household goods and services (+0.7%), and hospitality (+0.6%).
Conflicting spending/jobs data
CommBank concluded that continued growth in household spending signals the Australian economy is gaining momentum and it retained its position of a cut to the RBA cash rate in February.
But that was before the September unemployment data was released just hours later.
The figures delivered an unemployment rate of 4.5% (seasonally adjusted), the highest figure in four years and a weaker result than economists were expecting.
The jobs market shed 33,900 workers in September while the number of those employed rose by just 14,900, well below the 20,000 economists had been forecasting.
The participation rate, the percentage of working age Australians in the workforce, rose to a near record of 67%, suggesting more people are actively looking for work.
The official unemployment data backs up figures showing job ads fell 3.3% in September, the biggest monthly drop since February 2024, according to ANZ-Indeed data.
Where to for interest rates?
The latest jobs figures could change the RBA's view that the labour market is "tight", often cited as a reason for holding off on further cash rate cuts.
On the back of the jobs data, markets have now lifted their odds of a cash rate cut at the RBA's next monetary policy meeting on 3-4 November.
Although the RBA monetary policy board is unlikely to flinch in the face of one monthly jobs number, it may signal the labour market is not as robust as it had been.
Added to the mix is the all important quarterly inflation data, due on 29 October, a week before the RBA meeting.
NAB economists expect inflation to be higher than the RBA's forecast, leading to a pause in cash rate movements while the board rebuilds confidence in the inflation outlook.
However, NAB noted the bar will be lowered if the RBA reconsiders its long-held position that the labour market is "a little tight".
As it stands, all four big banks say there will be no change to the cash rate in November with three backing a February rate cut.
NAB, the current hold-out for a May cut, conceded Wedneday's jobs data clearly lifts the possibility of a November rate cut.
Meantime, ANZ economists said the November decision will come down to the balance between the labour market and inflation, with the RBA likely opting to dampen inflationary pressures by keeping the cash rate on hold.
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