Entertaining and eating out made a comeback in December, while the end of energy rebates sparked higher spending on utilities, according to the latest CommBank Household Spending Insights (HSI) report.

Food and beverage spending recorded its strongest monthly rise since April, up 1%, while hospitality lifted 0.7% for the second consecutive month.

Spending streak continues

The HSI index rose 0.7% in December, marking 15 months of consecutive gains. Annual growth sits at 6.3%.

“The strength in household spending late in the year was more robust than anticipated and points to a willingness to spend that exceeds our earlier forecasts,” says CBA Head of Australian Economics Belinda Allen.

“This momentum adds to concerns the economy may be running above its speed limit, supporting our expectation for a February rate hike.”

Utilities surge as rebates expire

Utilities saw the sharpest increase in spending in December, up 6.4% as government energy rebates expired, boosting annual growth in utilities spending to 15%.

Communications and digital spending climbed 0.7%, driven by streaming and mobile services, while transport costs rose 0.5%, fuelled by higher petrol prices and increased ride-sharing activity.

Recreation eased to 0.2% growth in the month after a bumper November driven by major sporting and concert events.

Looking ahead

“The Australian economy is at or above its speed limit and the RBA will be weighing up whether this momentum risks pushing inflation higher,” says Ms Allen.

“The upcoming CPI print will be critical in determining the timing of any rate hike.”