CommBank – Signs of slowing household spending after interest rate hike
The CommBank HSI is up in May across most categories, but discretionary spending is starting to ease as the cost of living rises.
Consumer spending intentions as measured by the CommBank Household Spending Intentions Index rose 2.9% in May to 115.9, although discretionary spending appears to be slowing after recent rate hikes.
The index – which combines
Rising home loan applications and housing searches on Google led to an increase in home purchase spending intentions of 14.8%, down 3.3% from
More Aussies on the move and higher gasoline prices drove transportation spending intentions, rising 11.7% in the month and 70.1% on
Travel spending intentions fell 1.5% in May after hitting a post-COVID peak in April, but remain 52.3% higher
ABC Senior Economist
“Household spending intentions rebounded in May after falling in April due to the number of public holidays. Given this seasonal volatility, the annual change in the CommBank HSI best reflects the state of our economy and is up 7.9% on the year – albeit due to higher prices rather than larger volumes,” she said.
“Rising prices and rising interest rates will have an impact on household spending. We see early indicators of weakness in the ABC’s credit and debit card spending data, with discretionary spending on recreation, clothing and footwear, and household furnishings and equipment down slightly and increased spending on food and drink from a peak.
“The RBA’s rate hike cycle is more aggressive than expected and we have revised our interest rate forecast up, as well as downgraded our outlook for economic growth and our forecast for house prices,”
The ABC’s economics team has revised its forecast following the larger-than-expected rise in the exchange rate last week. The team raised its cash rate target to 2.10% from 1.60% by the end of 2022, cut its GDP growth forecast for 2022 to 3.5% from 4.7% and expects national house prices to drop about 15%. by the end of 2023.
The CommBank HSI Index combines analysis of payments data from the ABC (
Index of household spending intentions –
What you need to know
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