The CommBank Household Spending Intentions (HSI) Index rose 1.8 per cent to 107.3 in February, led by a post lockdown increase in transport spending and an uptick in home buying spending intentions.
Transport spending intentions surged 11 per cent in the month, driven by higher fuel prices and increased spending on taxis, parking lots, car washes, freight and trucking services. Public transport spending remained comparatively weak with many people continuing to work remotely.
Home buying spending intentions rose 29.6 per cent in the month following the usual seasonal weakness in January and as people returned from summer holidays. But while home buying spending intentions rose in February in comparison to January, they were down 4.4 per cent in comparison to February 2021, when home buying was peaking after the first COVID lockdown. This result is consistent with the view of Commonwealth Bank of Australia (CBA) economists that property prices will end 2022 flat and decrease 8 per cent in 2023 as the effects of expected interest rates increases are felt.
The CommBank HSI Index – which is based on the largest consumer spending data set in Australia – also shows a 4.1 per cent pick-up in household services spending during February, due to increased activity in home improvements and the use of services such as child care and personal care. Travel spending was 6.9 per cent lower than in January as people returned from holidays, but was 40.5 per cent higher than February last year.
CBA Chief Economist Stephen Halmarick said the rise in the CommBank HSI Index in February showed Australians were back on the move following the end of COVID restrictions.
“Following the usual seasonal softness in January and effects of the Omicron variant, it was good to see spending intentions bounce higher in February. Increased spending intentions in home buying, transport and household services supports our view that as Australians get back out-and-about the economic outlook for 2022 is for a year of solid growth.
“Although we don’t expect significant impacts for the Australian economy from the Ukraine situation, we see three main implications: market sentiment and a ‘flight to quality’; higher energy prices and inflation; and reduced global growth.
“Given surging inflation as well as strong employment and wages growth data, we maintain our view that the Reserve Bank of Australia will need to raise interest rates earlier than many expect, with an initial increase to 0.25 per cent in June this year, rising to a peak of 1.25 per cent in early 2023,” Mr Halmarick said.
The CommBank HSI Index combines analysis of CBA payments data (Australia’s largest consumer spending data set covering approximately 40 per cent of payment transactions), loan application information and Google Trends publicly available search activity data. To access this powerful insight into spending trends visit www.commbank.com.au/hsi
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