Discretionary spending dips 4.4 percent: CBA HSI

Household spending has slowed down over April as discretionary spend dropped 4.4 percent, according to the latest CommBank Household Spending Intentions Index (HSI). 

The CommBank Household Spending Insights (HSI) saw its index dip 1.0 percent in April after an initial March Easter bump and annual spending growth slowing to 2.6 per cent for the year.

Findings are based on de-identified payments data from around 7 million CBA customers, covering roughly 30 percent of all Australian consumer transactions with insights collected from a combination of CBA Data and publicly available Australian Bureau of Statistics (ABS), CoreLogic and Reserve Bank of Australia (RBA) data. 

Spending on essentials such as education (+3.7 per cent), utilities (+2.5 per cent) and motor vehicles (+1.7 per cent) rose, according to the report [pdf]. 

However, trade pulled back when it came to spending on food and beverage (-3.8 per cent), hospitality (-3.3 per cent) and recreation (-2.6 per cent) which drew the Index down. 

CBA chief economist Stephen Halmarick said, “The April HSI paints a picture of a constrained consumer following an early Easter bump in March.”

“Significantly, the annual rate of household spending has fallen from 3.9 per cent in March to 2.6 percent in April, led by a large drop off in discretionary spending, which is down 4.4 percent in the month,” Halmarick said.

“We can see from the new home ownership insights included in this month’s report that renters, in particular, have cut back, with spending just inching higher at 1.3 percent over the year, while those who own their home outright experienced the strongest spending growth at 6.3 percent annually.”

Halmarick said that across the states, spending in Victoria “continues to be subdued as NSW pulled away to sit with South Australia and Tasmania as the only states to post spending growth for the month.”

According to Halmarick, Western Australia dropped 0.2 percent in April “to lose its mantle as the strongest spending state over the year.”

“We expect weak consumer spending and below-trend economic growth to continue throughout 2024 and despite recent inflation data surprising to the upside, we anticipate the RBA will cut interest rates in November this year,” Halmarick said. 

New additions to reporting

In its April HSI report, CommBank added new home ownership insights to view spending across homeownership types. 

The additional insights discovered challenges faced by renters whose spending has grown just 1.3 percent yearly compared with mortgage owners (+4.5 percent) plus outright owners (+6.3 percent). 

The index also included another new finding, with the addition of a per capita analysis of the index taking into account strong population growth. 

This showed an annual spending growth rate of just 1.4 percent compared to 2.6 percent for the traditional HSI.

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