According to recent statistics, the savings ratio for households has decreased to 1.5% - being the lowest level in three years.
Shane Oliver, chief economist at AMP Capital, told The Sunday Telegraph the level of savings has been steadily declining over the past year, partially through choice and partially due to increasing cost of living and rising interest rates.
“Growing job security and decent pay rises have made people more willing to spend but rising interest rates have also taken their toll and eaten into disposable incomes, prompting people to spend from their savings.”
New car sales are up 11.2%, thanks in part to tax-breaks for businesses, while spending on transport overall, which includes flights, is up 5.7%.
According to Treasury figures, during the credit crisis the average household savings ration was at 6.9% in December 2008.
While savings was at a high, interest rates were lower, petrol prices fell and the government sent out stimulus package money.
Economists link increased spending to renewed sense of job security.