The latest retail trade figures show consumers are shutting their wallets. Retail spending has remained flat for two months in a row – the worst result since 2012. Weak wages growth clearly is having an ongoing effect. But the latest re-weighting of our spending habits by the Bureau of Statistics also shows us moving our spending away from retail towards a mixture of more expensive necessities such as rent, education and utilities, and areas that were cheaper than in the past such as restaurant meals and international holidays.

We used to love to go shopping. From the start of 1990 through to the end of 2007, retail trade spending grew on average by 5.7% each year. The latest figures out last Friday showed that our spending grew by just 2.0% in trend terms in the past 12 months – the lowest ever recorded:

So sluggish is retail spending that since 2009 there have only been two months where annual growth has reached the previous average level.

The issue is twofold – the price of things is not rising by much and thus the turnover is not growing, and we are also not buying much in volume terms either.

In September, the volume of retail trade was 2.2% above the same time last year – making it a rare case where the growth in the volume of retail trade was larger than the dollar amount:

The reason is discount sales – people were buying more but not having to spend as much. Consider, for example, that in the past year the dollar amount spent at department stores fell but the volume of goods purchased increased 2.9%:

And while volume of sales is good – when we talk of economic growth of GDP, for example, we always talk in volume terms – retail trade is more importantly about current dollars. More dollars mean more money for shop owners, more ability to hire new staff and is indicative that people are willing to spend more money and not just wait for the sales.

One issue with retail trade is that because of changes in spending habits driven by costs of necessities and some non-retail luxuries such as holiday travel, Australians now spend less of their weekly budget on retail than they used to.

One area where the growth in dollars spent outstripped volume was for restaurants, cafes and takeaways. And this is something that is reflected in the latest weighting of the consumer price index released on Monday.

Every five to six years the ABS uses the latest housing expenditure survey to change how it calculates inflation, so as to reflect the changes households have made in their spending habits.

Essentially, the CPI is worked out by trying to gauge what the average household spends its money on each week.

Because it is an average, it is a weird type of household – for example, the ABS calculates that the average household spends money on both rent and buying a new home, as well as money on childcare, primary, secondary, and tertiary education, not to mention $41.51 a week on tobacco while also spending $15.60 on sports participation.

What the latest weighting shows is that, on average, households are shifting away from retail. Of the top 15 items that have seen the biggest shift towards greater spending, only spending on restaurant meals and tobacco count as retail spending. In general terms, the biggest shift in our spending has been towards education, insurance and financial charges, and housing costs:

The biggest change in housing costs is rent. In 2011, the ABS estimated the average Australian household spent 6.7% of its weekly spending on rent (remember because it is an average it includes households that don’t actually pay rent). Now it is up to 7.2%.

Oddly, despite the housing boom in the past five years, overall the ABS calculates the average household now spends less on buying a house.

The reason is because while housing prices have increased, so too has our purchase of cheaper apartments. And thus, because more people are buying apartments now than in the past, the overall average of money being spent on buying a new home has decreased:

The changes are not uniform across the nation.

Adelaide has seen the biggest increase in money spent on rent and electricity. In 2011 the average Adelaide household spent $28.66 a week on electricity – a figure that has grown 54% to $44.10. Only Darwin households spend more each week on electricity.

The amount spent on gas meanwhile has risen most in Sydney, Darwin and Canberra:

It means that we now spend more of our budget on electricity, gas and rent than ever before, but because of the drop in petrol prices over the past five years, we now spend less of our money on that each week than we have in the past:

But the big jump has been in childcare and education spending. Hobart households now spend on average 234% more on childcare than they did in 2011, while those in Perth spend 194% more on primary education:

The reason for the increase in average childcare spending is due to an increase in demand – ie more households are using it – an increase in standards, so the average quality (and cost) has increased, and a general price rise due to the increased demand.

In 2011, households across the country on average spent just 0.69% of their weekly budget on childcare – now that is up to 1.35%. It means increases in the cost of childcare will have a greater impact on inflation than before, as will the price of restaurant meals.

Households spend much the same as before on food and drink. In 2011, the ABS estimated we spent 16.8% of our spending each week on food and non-alcoholic beverages, now that is down slightly to 16.1%.

But the big change has been within the category. We now spend a lower share of our money each week on every sub-group within the category except restaurant meals:

The changes also affect the way cost of living is calculated. The record low interest rates has meant that households now spend less each week paying off their mortgage than before. In 2011, the ABS estimated the average employee household spent $181.95 a week on interest rate charges, now it is just $144.56.

The reduction in money spent by households paying their mortgage has shifted to other items – especially childcare, rent, utilities and, surprisingly, international holidays:

It means in the future interest rate cuts or rises will have less of an impact on cost of living than in the past.

But the good news is that from next year the ABS will be updating the CPI basket every year in December, which will ensure the inflation figures are more reflective of how we spend our money.

But no amount of adjustment of the data will rework the retail sales figures. With the latest wage price data out next week, the terribly weak retail trade figures suggest households have not received much of an increase in their income, and what little they have, they have not felt confident enough to spend it in the shops.