The CommBank Household Spending Intentions Index rose by 0.8% in August to 115.5.

The data shows the modest gain was driven by higher spending on health and fitness, home buying, motor vehicles, and household services sectors. 

A strong rise in motor vehicles spending (13.3%) this month indicates there may be some easing in international supply chain constraints.

Despite the recent RBA hikes, the home buying index rose 10% in August after two previous months of decline.

However, the report notes there are significant lags between an RBA rate hike and when higher mortgage repayments hit household budgets.

“While the index rose in August, we’re seeing weakness in discretionary spending following recent interest rate increases and a growing move to value purchasing,” said Stephen Halmarick, CBA chief economist.

“For instance, while grocery spending remains high, we’re hearing customers are swapping to value products in response to higher food prices.

“Spending for household services has also risen 4% in August, with charitable donations leading the category, likely signalling a stressful environment for many in the community.”

Gareth Aird, CBA's head of Australian economics, previously said there's typically a three-month lag time between interest rate rises and when consumers actually rein-in spending.

Spending Category Monthly change % Yearly change %
Motor Vehicle +13.3% -5.8%
Home buying +10.0% -23.6%
Health and fitness +7.2% +4.6%
Household services +4.0% +40.1%
Utilities +1.0% +1.6%
Education +0.8% +9.2%
Communications and digital streaming -0.3% -4.6%
Insurance costs -1.0% +2.0%
Retail -1.3% +14.4%
Travel -3.9% +141.2%
Transport -4.0% +140.1%
Entertainment -7.2% +23.3%

Source: CBA

In contrast, sectors like travel, entertainment, transport, and retail all recorded declines in August. 

Entertainment spending dropped by -7.2%, following a strong gain in the previous month (9%) due to school holidays.

According to Mr Halmarick, the decline is consistent with the view that higher interest rates will impact discretionary spending by households for the time being.


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