The CommBank Household Spending Intentions Index rose slightly by 1.05 per cent to 114.8 in July, reflecting the impact of higher prices as well as weaker discretionary spending following recent rate hikes.
The rise of the index was narrowly based on increases in the Entertainment, Transport, Retail and Utilities sectors, while declines were seen in Home Buying, Travel, Health & Fitness, Education and Household Services.
The index finished the month 12.2 per cent higher than in July last year, when NSW and Victoria were both impacted by lockdowns. The Entertainment category in particular was up a strong 9 per cent in July 2022 and up 24.5 per cent on July 2021, with school holiday activities likely driving growth
Retail spending grew by 5.2 per cent in July, with increases in alcohol and food goods spending mostly reflect rising prices.
CBA Chief Economist Stephen Halmarick said: "The improvement of the index in July was narrowly based on the Entertainment, Transport, Retail and Utilities sectors and reflects the impact of higher prices.
"While consumer spending remains higher than a year ago when much of Australia's East Coast was in lockdowns, we're also seeing a moderation in spending growth in interest rate sensitive sectors.
"We can expect consumer spending will slow further over the coming months as higher interest rates feed through into household budgets and as the Reserve Bank of Australia increases the cash rate further in pursuit of its goal to curb inflation," Mr Halmarick said.
CBA's economics team is forecasting further interest rate increases by the Reserve Bank of Australia of 50bp in September and 25bp in November to a terminal rate of 2.60 per cent, before interest rates are expected to be cut towards the end of 2023.
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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