Consumer spending in Australia rose 1.1% in July, and 7.7% year-over-year, with gains in both essential and discretionary spending, according to a Tuesday report by National Australia Bank (ASX:NAB).

Fuel spending increased 4.9% month-over-month as prices edged higher amid the escalated conflict in the Middle East and a smaller fuel excise discount.

Food retail spending rose 0.7% in July and was 6.7% higher over the year, supported by continued growth in supermarket and grocery spending, alongside higher spending on fresh food categories.

Spending rose across most states and territories in Australia in July, led by Tasmania at 2.2% and New South Wales at 1.7%.

Recreation and personal services spending rose 7.1% over the past year and increased a further 0.9% in July, reflecting continued demand for activities including cinemas, sports, arts and other leisure experiences.

People in Australia are "making room for leisure and entertainment," NAB Business Banker Vania Chen said. "Even as households keep a close eye on their budgets, experiences remain an important part of how people choose to spend their discretionary income."