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The CommBank Household Spending Insights (HSI) Index rose just 0.5 per cent in May. However signs are emerging that consumers are starting to loosen the purse strings for small luxuries thanks to lower costs in key spending areas like petrol and electricity bills. 

Despite overall spending softness in the second quarter so far, Hospitality and Recreation now rank at the top of annual spending categories when compared to May last year, as households splashed out on restaurants, food delivery, cinemas and online travel, indicating continued divergence in spending trends. 

In May, the strongest spending gains were in the Motor Vehicle (+1.5 per cent), Household Services (+1.2 per cent) and Health (+1.1 per cent) categories, while Utilities (-1.1 per cent) and Education (-0.5 per cent) fell during the month.

“The consumer spending rebound is unfolding at a slower rate than we expected, which could be the result of scarring from a loss of real household income post-COVID, and the impact of global uncertainty caused by trade tensions,” said Belinda Allen, Senior Economist at CBA.

“We are seeing some green shoots however, as our insights suggest households are using money saved from energy rebates and lower petrol prices to enjoy themselves by dining out and spending on experiences.”

“We expect to see a pickup in household spending in the second half of the year, and while our base case remains for the first RBA cash rate cut to come in August, the balance of probabilities is shifting towards July and will depend on upcoming CPI and labour market data.”  

The May report also showed that those with a mortgage (+3.3 per cent) and renters (+2.3 per cent) outspent those who own their home outright (+0.3 per cent) showcasing the impact of interest rate cuts and slowing rental increases on spending flexibility.

“It’s interesting to see the home ownership leaderboard flip in May, as those who own their home outright may be more likely to be concerned about the impact of lower interest rates and market volatility on superannuation balances, and curbing their spending as a result,” concluded Ms. Allen.  

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.

 

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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.