CBA: Household Spending Intentions To Fall

The CommBank Household Spending Intentions Index fell by 3.8% in April after reaching record-high levels in March.

The dip comes as Australians pull back on home buying, health and fitness, and transport spending while opting to put their hard-earned towards travel, entertainment and retail sectors.

The biggest drop came in home buying, with spending falling 21.5% after gains in February and March and is 13.1% lower than in April last year.

Further falls were seen in the health and fitness sectors, dropping 14% however spending is still up 2.9% on last year. Transport spending fell by 8.6% due to the reduction in the petrol excise but remain 13.5% up on the last year.

With international borders reopened, travel spending reached a new record high in April – exceeding its pre-COVID peak by gaining 10.6% during the month and 41% on April 2021.

Local households are spending more on entertainment, rising 6% in April led by increased activity in concerts and theatres alongside eating and drinking out, yet remains 1.8% down on last year.

Commonwealth Bank of Australia Senior Economist, Belinda Allen, said the seasonal volatility of April data due to additional public holidays meant that year on year movements better reflected the state of the economy,

“With an interest rate hiking cycle now underway the Australian economy is in a strong position. We are seeing a post COVID normalisation of consumer spending patterns, with lower spending on categories that increased during lockdowns like health & fitness, while higher travel and entertainment spending reflects more people being out and about,” said Ms Allen.

“Households have accrued a very high level of savings during COVID, the labour market remains tight and wages growth is accelerating. These factors will assist families with higher mortgage repayments over coming months,” Ms Allen said.