Aussies go on summer spending spree on travel and fitness
A surge in expenditures related to travel and gym memberships boosted the overall household spending by Australians in January, according to research by the Commonwealth Bank of Australia (CBA or CommBank).
The CommBank Household Spending Insights (HSI) Index recorded a 3.1% increase in the first month of the year, as people engaged in summer holiday activities and pursued their New Year’s commitments.
The index, which analyses spending across 12 categories, recorded upward movements in nine sectors, though the increments were largely modest. This comes after a period of decline witnessed in December.
Notably, the recreation sector, which includes travel agencies, online bookings, airlines, cruise lines, and fitness clubs, experienced a significant 13.5% rise in January, bouncing back from a 5.8% drop in December.
Spending on household goods saw a 10.5% increase, although it did not fully recover from the 14.9% fall in the preceding month.
Other areas such as hospitality, education, communications, utilities, insurance, health, and food and beverage also reported slight gains. However, these were somewhat counterbalanced by decreases in spending on motor vehicles, household services, and transport.
Region-wise, Victoria led with a 2.8% increase in spending, attributed partly to the influx of tourists for international events like the Australian Open.
Commenting on the January figures, Stephen Halmarick (pictured), chief economist at the Commonwealth Bank of Australia, highlighted the ongoing volatility in household spending during the summer.
“The trend for Australian household spending is softening, with the bounce in January not enough to make up the declines from December,” Halmarick said. “With the annual rate of inflation in January expected to be approximately 3.5%, 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.
Halmarick also forecasted a moderation in economic growth and a slowdown in spending through the first half of 2024. According to him, the combination of slowing inflation and reduced household spending could lead to the RBA lowering interest rates by September 2024.
The CommBank HSI Index, which offers a macro-level analysis of month-on-month spending trends, is derived from de-identified transaction data of approximately 7 million CBA customers, representing around 30% of all consumer transactions in Australia.
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