The Commonwealth Bank of Australia’s (CBA) Household Spending Insights (HSI) Index increased to 150.5 in June, a 0.6% increase that was primarily driven by a rise in recreation spending (+3.2%) and hospitality spending (+2.1%).
In its recent report, CommBank said the increase in recreation spend was due to online travel bookings, fitness clubs and gyms, and sporting goods stores. Recreation spending, however, has only seen a 0.2% increase in annual terms.
Meanwhile, hospitality is up 3.8% for the year, with pubs, taverns, bars, and food delivery services being the biggest drivers for the June increase.
For the year, the annual HIS growth rate remains subdued at 3.9%, with insurance spending recording an 8.8% increase.
Spending on other essentials like utilities (+6.8%) and transport (+5.7%), along with insurance, saw the biggest jumps in the year to June. CommBank said this suggests that consumers still dedicate a “significant share of their wallet to essential items.”
The report also showed significant differences across homeownership type.
Spending among renters declined 0.9% in the year to June, while spending increased for those who have a mortgage (+1.5%) and outright owners (+2.1%).
Among states, the Australian Capital Territory had the strongest spending growth at +1.5%, followed by New South Wales and South Australia, which both recorded a growth of 0.7%.
These other states also recorded a modest growth:
In the year to June, CommBank noted that the Sunshine State saw the strongest spending increase at 6.5% in Queensland, followed by WA (+5.4%) and SA (+5.1%).
While consumer spending continues to be relatively weak, the path of monetary policy will be dependent on several key pieces of economic data in the coming weeks, according to CBA chief economist Stephen Halmarick (pictured above).
“…We have witnessed a significant disparity in spending behaviours across homeownership categories, as renters pull back on spending in the year to June while mortgage holders and outright owners have increased spending,” Halmarick said.
He noted that the findings suggest that young Australians who are more likely to be renters are “tightening their wallets” and likely spend more on essentials, which are the fastest growing spending categories so far in 2024.
Halmarick believes the HIS will be an early indicator of the impact of the government’s income tax cuts and electricity rebates, which began on July 1.
“Our base case remains for the next move from the RBA to be easing of monetary policy, however this view will be dependent on upcoming employment and inflation data,” he said.
CommBank’s HIS index is tracked month-on-month data at a macro level based on data from seven million CBA customers, which is about 30% of all Australian consumer transactions.
