Household spending up 0.3% in June: CBA
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The news: Australian household spending increased in June, with the annual growth rate accelerating by 2.2 percentage points, according to the Commonwealth Bank’s Household Spending Insights (HSI) index.
The numbers: In June, the HSI index lifted by 0.3%, which is slightly slower than the 0.4% gains in April and May.
Annual growth reached 7.4% in June, from 5.2% in May, although this is largely driven by base effects with “a weak June 2024 likely overstating the lift in spending momentum this month”, according to the HSI index report.
Spending on utilities (+2.9%), education (+1.1%) and communications and digital (+1%) saw the largest gains, while spending on hospitality (-0.8%), motor vehicles (-0.1%) and recreation (-0.1%).
Across the June quarter, the HSI lifted 1.4%, which was just above the 1.2% growth in spending during the March quarter.
The context: CBA said its forecasts correspond with the Reserve Bank of Australia’s expectation that household spending will lift in the second quarter of 2025 after softer spending in the first quarter.
The Australian central bank said in its monetary policy decision statement on Tuesday that the March quarter national accounts data "confirmed domestic demand has been picking up over the past six months" and growth in household consumption is forecast for May as real incomes rise.
CBA said “the timing of energy rebates have made the Utilities category choppy” while the release of the Nintendo Switch 2 likely impacted the communications and digital sector.
The bank also noted that the areas that saw a decline in spending in June performed relatively well in May, demonstrating “the fickle nature of consumer spending at present”.
The sources: Commonwealth Bank media release, Statement by the Monetary Policy Board: Monetary Policy Decision
