The monthly CommBank Household Spending Insights Index (HSI) rose 1.1 per cent in May to 150.21 following a 1.0 per cent drop in April, continuing the month-to-month spending volatility seen throughout 2024.

While household spending rose in May, spending remains soft since January with monthly gains averaging just 0.1 per cent, pointing to a weak consumer environment. This compares to a monthly growth rate of 0.8 per cent in the first four months of 2023.

Nine of the 12 HSI spending categories rose in May, led by increases in spending on Household Goods (+2.3 per cent), Food and Beverage Goods (+1.8 per cent), Hospitality (+1.7 per cent) and Transport (+1.3 per cent), all of which were weak in April.

In the year to May 2024, the pace of increase in the HSI Index lifted to 4.3 per cent, driven by Insurance (+8.6 per cent), Utilities (+7.1 per cent), Transport (+6.1 per cent) and Education (+6.0 per cent) – all essential spending categories that have recorded price increases over the year.

On the flip side, the weakest categories over the past 12 months include Motor Vehicle (+1.6 per cent), Recreation (+2.6 per cent), Communications and Digital (+2.6 per cent) and Household Goods (+ 2.8 per cent).

Across the states and territories, all bar the Northern Territory recorded positive rates of growth in May, led by Queensland (+1.8 per cent), Tasmania (+1.7 per cent) and Victoria (+1.6 per cent). The Northern Territory (+5.7 per cent) and Western Australia (+5.6 per cent) lead spending growth in the year to May, while softer growth has been witnessed in the ACT (+2.6 per cent), Victoria (+3.7 per cent) and New South Wales (+4.8 per cent).

CBA Senior Economist Belinda Allen said despite a rise in spending in May, the consumer environment remains soft.

“Spending in May bounced back from April which continued the spending volatility we have seen throughout the year. When looking at spending trends since January however, we can see that the consumer spending environment remains muted, having risen by just 0.1 per cent per month on average since January and driven in large part by spending on essential categories like insurance, utilities and transport. This suggests that consumers are still needing to make spending choices and are prioritising essential purchases,” Ms Allen said.

“It is unlikely tax cuts commencing in the third quarter of 2024 will have a material impact on consumer spending and we are expecting households to save rather than spend their tax cut. Looking forward, the key for consumption will be growth in real household income, and the first quarter 2024 National Accounts data indicated this remains weak.

“Assuming the labour market loosens and inflation continues to cool, we anticipate the RBA can commence an easing cycle in late 2024. The challenging inflation backdrop and a shift in household spending behaviour are the key risks to this base case.”

1Seasonally adjusted terms.

Go to CBA Newsroom for the latest news and announcements from Commonwealth Bank.

Things you should know: 

  • NOT INVESTMENT RESEARCH. The Commonwealth Bank ‘Household Spending Insights’ is not investment research and nor does it purport to make any recommendations. The Commonwealth Bank ‘Household Spending Insights’ has been prepared without taking into account your objectives, financial situation (including your capacity to bear loss), knowledge, experience or needs. You should not act on the information contained in this document. To the extent that you choose to make any investment decision after having read this document, you should not rely on it but consider its appropriateness and suitability to your own objectives, financial situation and needs, and, if appropriate, seek professional or independent financial advice, including tax and legal advice. The data used in the ‘Commbank Spending Insights’ series is a combination of CBA Data and publicly available Australian Bureau of Statistics (ABS), CoreLogic and Reserve Bank of Australia data. Any reference made to the term ‘CBA data’ means the proprietary data of the Bank that is sourced from the Bank’s internal systems and may include, but is not limited to, home loan data, credit card transaction data, merchant facility transaction data and applications for credit. All customer data used, or represented, in this report is de-identified before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy. Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945