Australian households started 2026 in spending mode, with summer events and a solid job market helping drive another monthly lift in consumption, according to the latest CommBank Household Spending Insights (HSI) Index report.

Spending rose 0.5% in January, marking 16 consecutive months of growth, while annual spending growth eased slightly to 5.6%, following a strong finish to 2025.

“We’ve now seen consistent monthly spending growth for well over a year, which points to steady underlying demand across the economy,” says CBA Senior Economist Ashwin Clarke.

“While consumers have continued to spend, higher interest rates and easing income growth are likely to slow that momentum as the year progresses.”

Wage momentum remains solid

Australia’s wages growth held steady in January, with CBA data showing quarterly wage growth at 0.8% and annual growth at 3.1%. Overall, wages have been tracking broadly sideways, though there has been a gradual lift in quarterly outcomes since mid-2025.

Western Australia continued to report the strongest wage gains, while outcomes across the eastern states remained steady.

“While wage growth is firm but not excessive, weak productivity growth means businesses continue to face elevated labour cost pressures,” says Mr Ottley.

“This underpins our assessment that labour market conditions remain tight and are still contributing to inflation.”

Consumers splash out on summer events

Recreation was one of the strongest-performing spending categories in January, rising 1% in the month and sitting 7.6% higher over the year.

Consumers splashed out on tickets, travel and fitness, with major events including the Australian Open tennis and summer festivals drawing strong crowds. Spending rose across ticketing services, tourist attractions and travel agencies, reflecting households’ continued appetite for summer experiences.

The rebound in household goods spending – up 0.5% – suggests consumers’ willingness to spend extended beyond seasonal discount periods like Black Friday, says the bank, with strength across clothing, hardware and online marketplaces.

Utilities surge as rebates wind back

While Australians splashed out on summer fun, a large chunk of growth in their spending was driven by utilities, which recorded the largest monthly increase across categories, lifting 3.7% in January, following another strong lift in December.

The jump reflects the scaling back of federal energy rebates, explains the bank, with households facing higher electricity bills as subsidies expired. Over the year, utilities spending is up 15.6%, with outlays on electricity and gas driving the bulk of the increase.

Looking ahead

Mr Clarke says the early-2026 momentum reflects strong household fundamentals, but cautions that economic conditions are likely to tighten.

“Households have been supported by a solid labour market and healthy balance sheets, but higher interest rates and easing wage growth are expected to slow spending as the year progresses,” he says.

The January data predates the Reserve Bank of Australia’s February rate increase, and CBA economists expect the RBA to increase rates again in May.

“Rising mortgage payments, moderating income growth and persistent cost-of-living pressures are all expected to dampen spending growth over time,” says the bank.