Consumers are prioritising spending on essentials amid economic headwinds
The CommBank Household Spending Insights (HSI) Index witnessed a slight monthly increase of 0.2% in March, reaching 141.8, primarily due to consumers filling their fridges in anticipation of an earlier Easter break.
This rise in spending was notably driven by the food and beverage sector, which saw a 4% increase, and the transport sector, with a 4.2% uplift.
Key beneficiaries included supermarkets, liquor, convenience stores, butchers, and bakers, alongside a spike in spending on petrol stations (7.4%), ride-sharing services (14.5%), and public transport (6.7%)—attributed to higher fuel costs and the Easter long weekend activities.
CommBank also reported that geographically, New South Wales experienced a 2% increase in spending, surpassing the national average. Meanwhile, Western Australia remained the top performer with a 4.3% rise in spending for the year to March, contrasting with the Northern Territory, which recorded a decline of 0.9%, aligning it with Tasmania, Victoria, and the Australian Capital Territory below the national benchmark.
Despite 10 of the 12 HSI spending categories showing growth in March, CommBank noted that the overall rise was modest, and the HSI Index remained below its November 2023 peak of 142.6.
The latest HSI report also highlighted the continued downturn in household goods spending (-1.7%), marking the third decrease in four months, and a significant drop in recreation spending (-6.8%), suggesting a shift in consumer priorities towards essential expenses amidst challenging economic conditions.
Stephen Halmarick (pictured), CBA chief economist, said that the marginal spending increase in March, spurred by the early Easter holidays, reflected a cautious consumer sentiment.
“Much of the spending lift in March can be attributed to the earlier-than-usual Easter holidays with people travelling and entertaining at home,” Halmarick said. “Beyond food and beverage and transport, gains in other categories were modest, and another fall in spending on household goods suggests consumers are prioritising spending on essentials.
“The annual rate of increase of the HSI Index is steady at 3.4%, which is close to flat in real terms when an inflation rate of 3.5 to 4% is taken into account.
“Since the November RBA interest rate rise, we’ve seen consistently soft household spending, and we retain our view that, when coupled with decelerating inflation, the RBA can start lowering the official interest rate in September this year.”
The CommBank HSI index, which analyses month-on-month data based on de-identified payments information from approximately 7 million CBA customers, represents about 30% of all consumer transactions in Australia.
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