Households rejig spending as Middle East conflict sends fuel costs soaring

The first of a news series of reports based on card spending data from Commonwealth Bank shows Australian households are feeling the impact of the Middle East conflict most directly at the petrol pump, but their overall spending and incomes have stayed resilient to date as people reallocate budgets to deal with the crisis.

CBA’s weekly credit and debit card data to 27 March shows a sharp lift in fuel spending, reflecting higher petrol and diesel prices since the conflict escalated. Transport-related spending has risen as a share of total card spend, driven largely by fuel, which accounted for around two thirds of transport spending last year.

“Higher fuel prices are the most immediate transmission channel from the Middle East conflict to the Australian economy,” said Belinda Allen, Head of Australian Economics at Commonwealth Bank.

“We’re seeing that clearly in the data, with transport spending lifting sharply in recent weeks as petrol prices have moved higher.”

Household spending holding up

Despite higher fuel costs, household spending has remained steady in overall terms. Total weekly spending using cards held up across the week even as higher petrol prices lifted overall spend, but came after a softer patch in February.

Other areas of household spending have been more restrained.

Food and household goods spending has fallen back in recent weeks, while recreation spending has fallen, although that’s in line with typical seasonal patterns.

These trends suggest households are adjusting their budgets to accommodate higher fuel costs, rather than cutting back sharply overall.

“Consumers appear to be smoothing their spending from savings at this early stage,” Allen said.

“Softer discretionary spending, combined with still healthy savings buffers, is helping households absorb higher fuel prices without a significant pullback in overall consumption.”

Household incomes are also holding firm. “CBA weekly salary transaction data continues to show decent income growth that is flowing through to CBA bank accounts,” the new report says.

On energy costs, electricity and gas spending has remained solid in early 2026, largely reflecting the expiry of federal and state energy subsidies, rather than any direct impact from global energy markets.

Inflation expectations edge higher

There are early signs that higher petrol prices are feeding into inflation expectations. High frequency market measures, including inflation swaps – a financial instrument which is designed to hedge against inflation - and breakeven rates, which gauge the difference between normal government bonds and inflation-linked ones, have lifted.

Consumer inflation expectations have also moved higher alongside fuel prices.

“The Reserve Bank of Australia will be watching inflation expectations closely,” Allen said, saying while some measures of inflation expectations had risen, longer term measures remain largely stable.

Early signs of housing market softening

Elsewhere in the economy, there are also indications that Australian housing markets may be cooling off. Daily home price data shows early signs of price growth slowing. Prices are however still rising in Perth, Brisbane and Adelaide, but easing in Sydney and Melbourne. Auction clearance rates have also declined and are tracking below levels seen in 2024 and 2025.

Higher interest rates, consumer doubts about the economy and slower population growth are expected to weigh on housing activity throughout 2026, as is broader global uncertainty.