The CommBank Household Spending Insights (HSI) Index rose for the third month in a row in June, up 0.3% following gains of 0.4% in April and May. A lift in household spending is expected for the remainder of 2025, however a slower interest rate cutting cycle could dampen this recovery.

“Household spending is starting to show signs of consistency month-on-month and should continue to pick up this year as consumers begin to loosen their purse strings,” said CBA Senior Economist, Belinda Allen. 

“This recovery is taking longer than expected to occur, but there are green shoots emerging. The annual growth rate has picked up, but the recovery is not yet assured. Spending around sales events and new items show consumers are still deliberate on their spending decisions.”

There also remains a clear preference to save and pay down debt. Recent data from CBA showed that just 10% of eligible home loan customers chose to reduce their mortgage direct debit payments following the May interest rate cut. This follows a similar trend after the February rate cut when around 10% of eligible customers had adjusted repayments at the same point in time – eventually rising to 14% before the May RBA decision.

Ms Allen says the RBA’s decision to hold rates at 3.85% in July was unexpected, but anticipates the RBA to cut the cash rate in August by 25 basis points, with November the most likely option for a follow up rate cut.

“While we still anticipate a pickup in household spending in 2025, a slower rate cutting cycle could soften this recovery over the remainder of the year,” she said.

In June, homeowners without a mortgage saw the weakest yearly spending growth per capita at 3.5%, continuing the trend from May. NSW recorded the strongest household spending growth in June of the states and territories, rising 0.7%. Meanwhile Queensland has grown 7.3%, recovering well from ex-tropical cyclone Alfred in March, when the state posted the softest growth of all states at just 0.2%.