The monthly CommBank Household Spending Insights Index rose 0.7% to 137.0 in August.
This was led by increased education spending by international university students, higher transport spending due to increased petrol prices and elevated recreation activity related to the FIFA Women’s World Cup.
Based on de-identified payments data from approximately seven million Commonwealth Bank of Australia (CBA) customers – comprising roughly 30% of all Australian consumer transactions – the index shows that spending on household goods rose for a second month in a row after prolonged weakness. Gains in motor vehicles, health and insurance spending were offset by weaker hospitality and utilities spending – reflecting the government rebates available for energy bills.
Surging numbers of international students enrolling for universities saw education spending rise strongly by 2.8% in August, with the annual rate of spending on education accelerating to 14.7% and up from 9% in July.
Recreation spending rose 1.9% in August and to 8.4% on an annual basis due to the FIFA tournament and a number of big-name concert tours, with ticketing agency spending up 70% in the month. Recreation spending was also driven by online travel bookings, commercial airlines, cruise lines and accommodation.
State breakdown
Queensland saw the strongest monthly spending growth during August (up 1.5%).
This was followed by Tasmania (up 1.3%) and the ACT (up 1.1%), while annual spending growth remains strongest in Western Australia (up 4.7%) and South Australia (up 4.5%).
Spending growth is weakest in Victoria and flat year on year, with only a small rise in spending in August (up 0.4%).
Cost of living impacts
CBA Chief Economist Stephen Halmarick says that annual spending growth measured by the CommBank HSI Index remained subdued despite increasing 2.3% in August and was significantly weaker than its peak of 18.7% in August 2022 as households manage the increased cost of living.
“The effects of 400bp of Reserve Bank of Australia interest rate rises is clearly reflected in a significant slowdown in annual household spending growth measured by the CommBank HSI Index. With the RBA holding rates since June, our view is that the hiking cycle is now at an end,” he says.
“Monetary policy is now restrictive and financial conditions will continue to tighten in the months ahead on the lagged effect of RBA interest rate hikes and the fixed rate mortgage refinancing task. We continue to expect household spending to weaken further over the remainder of 2023 and into 2024.”