Greater numbers of Aussies on the move and higher petrol prices led transport spending intentions, rising 11.7 per cent in the month and up 70.1 per cent on May 2021. Health & fitness spending intentions rose 12.8 per cent in May, up by 7.3 per cent on the year.
Travel spending intentions fell 1.5 per cent in May after recording a post-COVID high in April, but remain 52.3 per cent above May 2021. A decline in travel related transactions and Google searches was no surprise after a busy holiday period in April, which also explains a 4.1 per cent fall in entertainment spending intentions in May.
CBA Senior Economist Belinda Allen said consumer spending patterns continued to shift post-COVID and showed signs of softening in response to higher interest rates and following incredible momentum after pandemic restrictions were eased late 2021.
“Household spending intentions bounced in May after falling in April due to the number of public holidays. Given this seasonal volatility, the annual change of the CommBank HSI Index best reflects the state of our economy and it is up 7.9 per cent on the year – albeit due to higher prices rather than stronger volumes,” she said.
“Higher prices and rising interest rates will impact household spending. We’re seeing early indicators of softness in CBA credit & debit card spending data, with discretionary spending on recreation, clothing & footwear and household furniture & equipment trending slightly down and increased spending on eating & drinking out down from a peak.
“The RBA rate hiking cycle is more aggressive than earlier expected and we have revised our interest rate forecast higher, as well as downgraded our economic growth outlook and dwelling price forecasts,” Ms Allen said.
CBA’s economics team revised its forecasts following last week’s larger than expected increase in the cash rate. The team has raised its cash rate target to 2.10 per cent from 1.60 per cent by the end of 2022, trimmed its GDP growth forecast for 2022 to 3.5 per cent from 4.7 per cent, and expects national dwelling prices to fall by around 15 per cent by the end 2023.
The CommBank HSI Index combines analysis of CBA payments data (Australia’s largest consumer spending data set covering approximately 40 per cent of payment transactions), loan application information and Google Trends publicly available search activity data. To access this powerful insight into spending trends visit www.commbank.com.au/hsi