Household spending slowed in April: CBA
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The news: The Commonwealth Bank's Housing Spending Insights (HSI) index showed that consumers held back on discretionary spending in April, with renters cutting back the most.
The numbers: The HSI index fell 1% to 148.1 points in April, with annual spending growth slowing to 2.6% for the year.
The index remains below the peak of 149.7 points in January 2024. It launched in 2019 at a baseline level of 100 points and takes seasonally adjusted monthly spending figures for 12 categories.
Spending on essentials such as education (3.7%), utilities (2.5%) and motor vehicles (1.7%) rose in the month, but consumers spent less on food and beverage (-3.8%), hospitality (-3.3%) and recreation (-2.6%).
The annual rate of household spending fell from 3.9% in March to 2.6% in April, led by a large drop off in discretionary spending which lowered 4.4% in the month.
CBA's new home ownership insights, which assesses spending across home ownership types, revealed that renters' spending has grown the least annually (1.3%), compared with mortgage owners (4.5%) and outright owners (6.3%).
Across the states, Victoria's spending showed the weakest trend, down 1.2% for the month and up 1.9% for the year. South Australia (0.3%), Tasmania (0.3%) and NSW (0.1%) showed spending resilience over the month, with Tasmania replacing Western Australia as the strongest spending state overall, growing 4% annually.
The context: The CBA noted that the April HSI "paints a picture of a constrained consumer", following an early Easter bump in March. The big four lender said it expects weak consumer spending and below-trend economic growth to continue throughout 2024.
It also anticipates the Reserve Bank will cut interest rates in November this year and lower the cash rate by 25 basis points to 4.1% in 2024.
The source: Commonwealth Bank media release
