The CommBank Household Spending Intentions (HSI) Index for January fell 6.9 per cent led by normal seasonal declines in retail and entertainment spending after Christmas and with signs of slowing activity following recent interest rate increases.
The first “normal” summer break since Covid supported general spending during the month and a lift in both domestic and international travel boosted the Travel spending index by 8.2 per cent on the month. There was a large lift in spending on airlines and more modest gains in cruise lines, trailer parks and campgrounds, and travel agents, while spending on accommodation fell.
Entertainment spending fell 13.2 per cent in original terms and in line with usual seasonal falls in January after stronger spending on eating and drinking out in December, but was marginally higher when seasonally adjusted – reflecting pent-up demand after two years of holiday breaks impacted by the pandemic.
Retail spending in the month of January fell by a large 21.3 per cent in original terms, but was marginally higher when seasonally adjusted. Annual retail spending was up 5.9 per cent in the year to January, but with inflation running at 7.9 per cent over this period, this points to slowing activity in the retail space.
Commonwealth Bank of Australia Chief Economist Stephen Halmarick said January’s CommBank HSI Index highlighted that Australians had made the most of the summer break following several years of Covid impacts and natural disasters, while households were beginning to feel the pinch from rising interest rates and bills.
“Australians certainly took advantage of the first ‘normal’ summer break since the beginning of the pandemic to take a holiday and this helped support general levels of spending across the economy,” Mr Halmarick said.
“With the CBA predicting further interest rate hikes from the RBA in the coming months and a high volume of fixed rate home loans expiring over the next 12 months, household budgets are becoming increasingly constrained. We expect a slowdown in consumer spending in 2023 and downside risks are building for the Australian economy.”
CBA’s Economics team is forecasting two further 25bp interest rate increases in March and April 2023 to a peak cash rate of 3.85 per cent, following last week’s 25bp hike to 3.35 per cent by the Reserve Bank of Australia.
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: commbank.com.au/hsi
Disclaimer: The information contained in this media release is published solely for informational purposes and provides general market-related information, and is not intended to be an investment research report. This media release has been prepared without taking into account your objectives, financial situation (including the capacity to bear loss), knowledge, experience or needs. Before acting on the information in this media release, you should consider its appropriateness and, if necessary, seek appropriate professional or financial advice, including tax and legal advice. The data used in this media release is a combination of ‘CBA transaction data’ and Google Trends™ data. Google Trends is a trademark of Google LLC. The term ‘CBA transaction data’ refers to the proprietary data of the Commonwealth Bank of Australia (“the Bank”) that is sourced from the Bank’s internal systems and may include, but is not limited to, credit card transaction data, merchant facility transaction data and applications for credit. The Bank takes reasonable steps to ensure that its proprietary data is accurate and that any opinions, conclusions or recommendations are reasonably held, or are made at the time of compilation of this media release. As the statistics take into account only the Bank’s data, no representation or warranty is made as to the completeness of the data and it may not reflect all trends in the market. All customer data used or represented in this media release is anonymous and aggregated before analysis, and is used and disclosed in accordance with the Bank’s Privacy Policy Statement. Full disclosures and disclaimers.
Go to CBA Newsroom for the latest news and announcements from Commonwealth Bank.
