Thursday, November 14, 2024

Household spending declines in September

The monthly CommBank Household Spending Insights (HSI) Index declined 0.7% in September to 146.7, despite increased recreation spending around the AFL and NRL grand finals.

Six of the 12 spending categories saw a decline in the month, with hospitality leading the drop (down 2.8%), followed by transport (down 2.5%), household goods (down 2.3%), and food and beverage (down 0.6%).

Recreation helped offset these declines, rising 1.5% in September, largely driven by an 18% surge in ticketing services as sports fans snapped up tickets to the AFL and NRL grand finals. Spending on education and insurance also rose, each up by 0.7%. Utilities spending, unexpectedly up 1.3%, is said to reflect the impact of rising local council and strata management fees, even as electricity costs declined off the back of government rebates.

There has been a notable decline in spending on transport, impacted by the falling price of petrol, down approximately 15% in the past 12 months. Transport was the only category to record declines both monthly (down 2.5%) and annually (down 7.2%).

On an annual basis, there was a significant slowdown in the pace of spending growth in the year to September to just 2.1%, down from 3.7% in August.

Renters have witnessed the weakest spending in the year to September, down 1.1% for the year, compared to those with a mortgage (up 1.2%) and those who own their home outright (up 2.3%).

Commonwealth Bank of Australia Chief Economist Stephen Halmarick says HSI data suggests income tax cuts hasn’t led to a material rise in consumer spending.

“The spending slowdown in September was expected after an early Father’s Day led to consumers splashing out on household goods and hospitality for Dad. Although we saw a rise in recreation spending associated with the AFL and NRL grand finals, consumer spending overall remains subdued, now growing at just over 2% for the year,” he says.

“It’s important to note that the only other spending categories to rise in September were all essentials, indicating that increased take-home pay from tax cuts is largely being used to pay down debt and on staples, not spending on discretionary items. This trend is reflected in the year to September, supporting our view that softer economic data, coupled with a further deceleration in inflation will see the RBA cut interest rates in December 2024.”

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