Australians are saving their tax cuts rather than going on a spending splurge, according to data that finds the average person has benefited by $604 since July.

Westpac figures show that while Australians are more than $6.4 billion better off since the stage-three tax cuts came into effect, only about 16 per cent of the windfall has been spent.

The overwhelming majority, 84 per cent, has been stored in savings as households navigate torrid cost-of-living pressures, including higher energy and housing bills.

“While the 1.5 per cent quarterly increase in spending is nothing to baulk at, it equates to an average increase in spending of around $138 per person on a seasonally adjusted basis,” Westpac Group economist Jameson Coombs said.

“This is much less than the average cumulative tax benefit from stage three of $604 ($595 in seasonally adjusted terms).”

The September quarter saw the biggest quarterly inflow into savings and mortgage offset accounts in three years (since the depths of Covid-19) on a per customer basis.

The increase in savings has been so substantial that the past quarter has seen the largest average decline in mortgage balances in two years, meaning families are looking to get ahead on their bills where they can.

The Westpac data is drawn from a large data set that uses anonymised transaction and account information from a million customers to provide a “complete view of income, spending, saving and borrowing flows”.

Separate Reserve Bank figures back up the Westpac data, and show that households focused on paying down debt in August with $245 million off outstanding credit card bills.

“Households are using the improvement in disposable income to rebuild their flow of savings and pay down mortgage debt rather than materially increasing their spending,” Coombs said.

The Westpac figures also show that taxpayers in the lowest income brackets who benefited the least or not at all from stage-three tax cuts have increased their spending the most.

That group includes people such as retirees, pensioners and recipients of other government assistance payments.

The most popular spending categories were transport, travel, entertainment, recreation and dining out, which is consistent with a broader trend towards services spending over household goods.

But more broadly, the evidence that households are saving their tax cuts will please the RBA, which based its forecasts for demand and by extension inflation on that assumption back in June.

Official data about consumption and the impact of the tax cuts will come from the ABS next week too, which the Commonwealth Bank says will be the “clearest indication” for central bankers.

“The consumer response [to the stage-three tax cuts] has so far been muted,” CBA chief economist Gareth Aird said.

“The upshot being that savings have lifted over the September quarter.”

Most economists still don’t anticipate an interest rate cut until next year, but there are hopes that central bankers will begin easing mortgage bills before Christmas if inflation hits the target band.

“Upside inflation risks from consumption remain muted,” Coombs said.

“However, there are also implications for the growth outlook. If households are more reluctant to spend the improvement in their disposable income from tax cuts, this could have broader consequences for medium-term consumption activity.”