 Index fell by 0.2% in February.){kind=link}
The monthly CommBank Household Spending Insights (HSI) Index fell by 0.2% in February.
The bank notes that Valentine’s Day failed to invigorate spending with consumers pulling back most on recreation (down 1.6%) and hospitality (down 1.2%) purchases during the month.
Spending on food and beverage (down 0.7%), education (down 0.6%) and transport (down 0.5%) also fell in February from a month earlier.
Half of the 12 HSI spending categories rose in February, led by essential spending on utilities (up 1.9%), health (up 0.7%) and insurance (up 0.7%).
“The lift we saw in spending at the end of 2024, driven by discount and sales activity, hasn’t carried through to the New Year as constrained consumers dedicate a large portion of their wallet to spending on the essentials,” says Commonwealth Bank of Australia Senior Economist Belinda Allen.
“The annual HSI spending growth rate has slowed considerably in February to 1.5% – a result of a combination of factors, including a shorter February than the 2024 leap year and the absence of last year’s ‘Taylor Swift effect’ which boosted national spending this time last year.”
According to the index, it is a varied picture across the country with the ACT and Tasmania experiencing negative annual growth rates of 1.6% and 0.2% respectively, and Victoria flat at 0.7%. This is compared with the faster performing states of Western Australia (up 2.3%), South Australia (up 2%), Queensland (up 1.9%) and NSW (up 1.7%).
“Annual spending has been mixed across the country and we await the March spending data to gauge the impacts of ex-Tropical Cyclone Alfred with parts of Queensland and northern NSW heavily impacted by the natural disaster,” says Ms Allen.
“Looking ahead for the year, we believe it will take further interest rate relief to lift national consumer spending. We expect the RBA to cut interest rates in May with data for the first quarter of 2025 confirming inflation is tracking toward the RBA’s 2-3% target.”
Renters continue to wind back spending the most, with the annual rate of spending in original per capita terms declining by 1.9%, compared with those with a mortgage (down 0.9%) and those who own their home outright (down 0.4%).