Household goods spending rose by 1.7% in August compared to July, according to Commonwealth Bank’s ‘Household Spending Insights’ research.
This followed a revised gain of 3.9% in July.
However, household goods spending dropped 3.6% on a yearly basis in August 2023, while July recorded a 3.7% drop.
In the year to August, the largest source of weakness in household goods was a reduction in spending on men’s and women’s clothing stores, luxury boutiques, hardware, appliances and furniture.
CommBank research noted this was partly offset by some higher spending via online marketplaces, used and second-hand goods stores, discount and variety stores and activewear stores.
Only two other sectors reported yearly drops in spending: transport (-1.4%) and household services (-8.4%).
The sectors with the largest rises were education at 14.7%, insurance at 13.5% and recreation at 8.4%.
CommBank noted these rises were led by a surge in international university students, higher transport spending due to increased petrol prices and elevated recreation activity related to the FIFA Women’s World Cup.
The data is based on de-identified payments data from approximately 7 million CBA customers, comprising around 30% of all Australian consumer transactions.
The CommBank HSI Index is based on 12 spending categories, with a breakdown provided between goods and services, retail and non-retail, as well as essential and discretionary spending.
According to CBA, the index shows that spending on household goods rose for a second month in a row after prolonged weakness, while gains in motor vehicles, health and insurance spending were offset by weaker hospitality and utilities spending – reflecting the government rebates available for energy bills.
CBA chief economist Stephen Halmarick said annual spending growth remained subdued despite increasing 2.3% in August, and was significantly weaker than its peak of 18.7% in August 2022 as households manage the increased cost of living.
“The effects of 400bp of Reserve Bank of Australia interest rate rises is clearly reflected in a significant slowdown in annual household spending growth measured by the CommBank HSI Index,” Halmarick said. “With the RBA holding rates since June, our view is that the hiking cycle is now at an end.
“Monetary policy is now restrictive and financial conditions will continue to tighten in the months ahead on the lagged effect of RBA interest rate hikes and the fixed rate mortgage refinancing task. We continue to expect household spending to weaken further over the remainder of 2023 and into 2024.”