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The monthly CommBank Household Spending Insights (HSI) Index fell sharply in December, dropping 3.9 per cent, as the cumulative effect of successive interest rate rises as well as consumers bringing forward holiday spending flowed through to household spending. 

Spending fell in eight of the CommBank HSI Index’s 12 underlying categories, with the biggest fall seen in household goods (-16 per cent) including furniture and household appliances. 

December also saw declines in recreation (-6.5 per cent), food and beverage (-2.7 per cent) and hospitality (-0.8 per cent). These falls were partly offset by increased spending on transport (+1.0 per cent), insurance (+0.6 per cent) and health (+0.2 per cent). 

CBA Senior Economist Belinda Allen said the fall in December more than offset the gain of 1.6 per cent in November 2023 and continued the pattern of recent years where strong consumer spending in November is followed by weak results for December. 

“Household budgets are undoubtedly constrained with rate rises leading to a weakening of consumer spending,” Ms Allen said. 

“Households in all states reduced spending in December, led by declines in Victoria, South Australia and New South Wales.

“With the pace of economic growth in Australia moderating and the full impacts of November’s rate rise yet to flow through to the consumer, we expect a further slowdown in the pace of household spending over the coming months. 

“We have also seen inflation moderate which supports our view that the monetary policy tightening cycle has come to an end and that the RBA can join the expected global shift and start to lower interest rates in September this year.”

CBA is forecasting the RBA will lower the cash rate by 75bp in the second half of 2024, starting in September, and a further 75bp in first half of 2025. 

The CommBank HSI index – which tracks month-on-month data at a macro level and is based on de-identified payments data from approximately 7 million CBA customers, comprising roughly 30 per cent of all Australian consumer transactions – also showed sharp differences among certain states and territories. 

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Things you should know

  • NOT INVESTMENT RESEARCH. The Commonwealth Bank ‘Household Spending Insights’ is not investment research and nor does it purport to make any recommendations. The Commonwealth Bank ‘Household Spending Insights’ has been prepared without taking into account your objectives, financial situation (including your capacity to bear loss), knowledge, experience or needs. You should not act on the information contained in this document. To the extent that you choose to make any investment decision after having read this document, you should not rely on it but consider its appropriateness and suitability to your own objectives, financial situation and needs, and, if appropriate, seek professional or independent financial advice, including tax and legal advice. The data used in the ‘Commbank Spending Insights’ series is a combination of CBA Data and publically available Australian Bureau of Statistics (ABS), CoreLogic and Reserve Bank of Australia data. Any reference made to the term ‘CBA data’ means the proprietary data of the Bank that is sourced from the Bank’s internal systems and may include, but is not limited to, home loan data, credit card transaction data, merchant facility transaction data and applications for credit. All customer data used, or represented, in this report is de-identified before analysis and is used, and disclosed, in accordance with the Group’s Privacy Policy. Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945