CBA Says Household Spending is On the Rise

The Commonwealth Bank of Australia’s (CBA) monthly CommBank Household Spending Intentions (HSI) Index combines analysis of the bank’s spending data and loan application information with Google Trends publicly available search activity.

Last week the Bank announced that the HIS index rose by 0.8 per cent in August 2022 to 115.5, highlighting momentum in the Australian economy, higher inflation pressures and the impact of the Reserve Bank of Australia’s monetary policy tightening.

In particular there were increases in the categories of health and fitness, home buying, motor vehicles and household services.

Health and fitness spending rose 7.2 per cent this month and 4.6 per cent compared to August 2021, focused on spending for medical services, doctors and hospitals, due in part to an increase in non-essential operations which has been delayed during COVID.

A strong rise in motor vehicles spending by 13.3 per cent in August indicates some easing in international supply chain constraints that have been dominating the sector, with ordered vehicles being delivered in greater numbers.

In contrast, there was a weakness in discretionary spending in sectors like travel, entertainment, transport and retail. Travel dropped 3.9 per cent in August, but is 141.2 per cent higher compared to August 2021 when COVID restrictions were widespread across much of eastern Australia. Entertainment spending similarly declined by 7.2 per cent following gains in July when movie theatres, restaurants and spending on food were all higher.

Following the recent fifth consecutive monthly increase in interest rates by the Reserve Bank of Australia, CBA’s Economics team is forecasting 25bp interest rate increases in October and November, taking the cash rate to 2.85 per cent, before the RBA looks to cut rates in H2 2023.

• Topics:

• Finance
• My House My Home