Travel and gyms boost household spending: CBA
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The news: Household expenditure rose 3.1% in January on the back of spending on travel and gyms, according to the CommBank Household Spending Insights Index.
The numbers: Recreation spending jumped 13.5% after a 5.8% decline in December. The category includes travel agencies, online travel bookings, airlines, cruise lines and fitness gyms.
Household goods spending was up 10.5% after a 14.9% fall in December.
Modest increases in spend included hospitality (2.2%), education (1.9%), communications and digital (1.2%), utilities (1.1%), insurance (0.7%), health (0.6%), and food and beverage (0.1%).
However, spending on motor vehicles, household services and transport fell.
The context: December 2023 recorded a 3.5% fall in household spending, so the rise in January did not offset those declines.
CBA chief economist Stephen Halmarick said the bank expects spending to continue softening in the coming months as the Reserve Bank of Australia’s November 2023 interest rate rise flows through to mortgage repayments and further constrains household budgets.
What they said: “With the annual rate of inflation in January expected to be approximately 3.5%, household spending is close to flat in real terms and remains weak on a real per capita basis,” Halmarick said.
“Economic growth in Australia is moderating. We expect to see a further slowdown in the pace of household spending through the first half of 2024. Together with decelerating inflation, softer household spending supports our view that the RBA can start to lower interest rates in September this year.”
The source: CBA media release
