rose 3.1 per cent in January 2024, led by spending on travel and gyms as Australians made the most of their summer break and New Year’s resolutions.
Spending increased in nine of the CommBank HSI Index’s 12 underlying categories, albeit most were modest gains following the falls recorded in December 2023. The exception was Recreation spending (travel agencies, online travel bookings, airlines, cruise lines and fitness clubs/gyms), which was up a significant 13.5 per cent in January after a 5.8 per cent decline in December. Household goods spending was up a strong 10.5 percent in January, but this did not fully offset the 14.9 per cent decline in December.
Modest increases were seen in Hospitality (+2.2 per cent), Education (+1.9 per cent), Communications and digital (+1.2 per cent), Utilities (+1.1 per cent), Insurance (+0.7 per cent), Health (+0.6 per cent) and Food and beverage (+0.1 per cent). Gains were partly offset by reduced spending on Motor vehicles, Household services and Transport.
Victoria saw the largest lift in spending among the states, up 2.8 per cent on the month, as international sporting events such as the Australian Open drove inbound tourism.
CBA Chief Economist Stephen Halmarick said the rise in January continued the volatility seen in household spending over the summer months and did not fully offset the -3.5 per cent fall recorded in December 2023 (revised from -3.9 per cent on updated seasonal adjustment factors).
“The trend for Australian household spending is softening, with the bounce in January not enough to make up the declines from December,” Mr Halmarick said.
“With the annual rate of inflation in January expected to be approximately 3.5 per cent, household spending is close to flat in real terms and remains weak on a real per capita basis.
“We expect to see an ongoing softening in consumer spending in coming months as the RBA November 2023 interest rate increase flows through to mortgage repayments and further constrains household budgets.
“Economic growth in Australia is moderating. We expect to see a further slowdown in the pace of household spending through the first half of 2024. Together with decelerating inflation, softer household spending supports our view that the RBA can start to lower interest rates in September this year,” Mr Halmarick said.
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.
1Seasonally adjusted terms.
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