Household goods spending has reaped the largest percentage lift in May compared to the prior month, with the category jumping up 2.3 per cent.
This follows three consecutive monthly falls for the category and also led to a year-on-year lift of 2.8 per cent after weakness through much of 2023.
These stats are revealed in the latest monthly household spending report by CommBank, with its Household Spending Insights Index (HSI) rising 1.1 per cent in May 150.21 following a 1.0 per cent drop in April.
While household spending rose in May, CommBank added that spending has remained soft since January with monthly gains averaging just 0.1 per cent, pointing to a weak consumer environment. This compares to a monthly growth rate of 0.8 per cent in the first four months of 2023.
Within the household goods category, online marketplaces and beauty drove the surge, which was offset by falls in men's and women's clothing retailing and luxury boutiques.
The second-largest category growth was in food and beverage goods (1.8 per cent), followed by hospitality (1.7 per cent) and transport (1.3 per cent), all of which were weak in April.
In the year to May 2024, the pace of increase in the HSI Index lifted to 4.3 per cent, driven by insurance (8.6 per cent), utilities (7.1 per cent), transport (6.1 per cent) and Education (6.0 per cent) – all essential spending categories that have recorded price increases over the year.
The weakest categories over the past 12 months include motor vehicle (up 1.6 per cent), recreation (2.6 per cent), communications and digital (2.6 per cent) and household goods (2.8 per cent).
CBA senior economist Belinda Allen said despite a rise in spending in May, the consumer environment remains soft.
“Spending in May bounced back from April which continued the spending volatility we have seen throughout the year,” Allen said.
“When looking at spending trends since January however, we can see that the consumer spending environment remains muted, having risen by just 0.1 per cent per month on average since January and driven in large part by spending on essential categories like insurance, utilities and transport.
“This suggests that consumers are still needing to make spending choices and are prioritising essential purchases.”
Allen added that it is unlikely tax cuts commencing in the third quarter of 2024 will have a material impact on consumer spending.
“We are expecting households to save rather than spend their tax cut,” she said. “Looking forward, the key for consumption will be growth in real household income, and the first quarter 2024 National Accounts data indicated this remains weak.
“Assuming the labour market loosens and inflation continues to cool, we anticipate the RBA can commence an easing cycle in late 2024. The challenging inflation backdrop and a shift in household spending behaviour are the key risks to this base case.”
Across the states and territories, all bar the Northern Territory recorded positive rates of growth in May, led by Queensland (1.8 per cent), Tasmania (1.7 per cent) and Victoria (1.6 per cent).
The Northern Territory (5.7 per cent) and Western Australia (5.6 per cent) led spending growth in the year to May, while softer growth has been witnessed in the ACT (2.6 per cent), Victoria (3.7 per cent) and New South Wales (4.8 per cent).