New South Wales saw a significant increase in spending, up 2 per cent, to move from well below the national average to above the national average. Western Australia remains the strongest state for the year to March (+4.3 per cent), while spending in the NT was the weakest at -0.9 per cent, joining Tasmania, Victoria and the ACT below the national average.
While 10 of the 12 HSI spending categories increased in March, the rise across most categories was modest and the HSI Index remains lower than the 142.6 reading in November 2023, pointing to a softening of household spending since the final RBA rate hike that month.
Notably, spending on household goods fell for the third time in four months (-1.7 per cent), suggesting household budgets are adjusting to the tough environment by prioritising spending elsewhere. Recreation was also down 6.8 per cent in March, following a spending boost at summer music events. Household goods spending is now negative for the year, while Recreation spending is up a small 0.4 per cent year to March. These trends are also reflected in the fact that spending on essentials is up 4.4 per cent in the year to March, while spending on discretionary items is up just 1 per cent.
CBA Chief Economist Stephen Halmarick said that despite a boost from Easter, the March HSI continued to paint a picture of a soft consumer.
“Much of the spending lift in March can be attributed to the earlier-than-usual Easter holidays with people travelling and entertaining at home. Beyond Food & Beverage and Transport, gains in other categories were modest, and another fall in spending on Household Goods suggests consumers are prioritising spending on essentials,” Mr Halmarick said.
“The annual rate of increase of the HSI Index is steady at 3.4 per cent, which is close to flat in real terms when an inflation rate of 3.5-4 per cent is taken into account.
“Since the November RBA interest rate rise we’ve seen consistently soft household spending and we retain our view that, when coupled with decelerating inflation, the RBA can start lowering the official interest rate in September this year.”
Despite the challenging economic conditions, Australians showed their generosity in March, with a 1.4 per cent increase in the Household Services categories driven in part by increased spending on charities.
The CommBank HSI index tracks month-on-month data at a macro level and is based on de-identified payments data from approximately 7 million CBA customers, comprising roughly 30 per cent of all Australian consumer transactions.
Read the March HSI.
1 Seasonally adjusted terms.
