The CommBank Household Spending Insights (HSI) Index rose 0.8% in July, driven by spending on recreation (up 1.8%) and hospitality (up 1.5%).
CBA Senior Economist Belinda Allen says the past five months of steady spending growth suggests consumers are becoming more confident and willing to open their wallets.
“The British & Irish Lions rugby tour and State of Origin decider helped boost spending in July as fans spent up on travel, entertainment and accommodation,” she says.
“We have been anticipating a lift in household spending for some time, supported by rising real disposable incomes, increased household wealth, and a resilient labour market. Although the recovery has taken longer than expected to materialise, the consistent growth in recent months gives us confidence that momentum is building.
“We expect a further pickup in spending through the rest of this year and into next, helping to drive a broader economic recovery.”
10 out of the 12 categories recorded growth in July. Beyond recreation and hospitality, other spending categories recording gains during the month included motor vehicles (up 1.4%), insurance (up 1.2%) and health (up 1.1%). Spending on education was flat, and utilities (down 0.5%) was the only category to see a fall during the month.
Spending over the year
The HSI Index has risen 6.4% over the year, with the biggest gains occurring across communications and digital (up 10.9%), recreation (up 10.3%) and hospitality (up 10%).
Education is now the weakest category over the year (down 1.8%) while spending on utilities is now in positive territory as cost-of-living energy subsidies are gradually wound back.
“Strong growth in spending on recreation and hospitality over the year underscores that consumers are prioritising experiences and being deliberate about their spending choices,” says Ms Allen.
“This was especially evident in July, when the British & Irish Lions tour and the State of Origin decider drove a surge in spending on these categories.”
Looking ahead
“Following the August interest rate cut, we expect the RBA to cut the cash rate once more in November to 3.35%,” says Ms Allen.
“A lower rate environment should help fuel consumer optimism and spending in the year ahead, and into 2026.”
