Australians have taken a breather from opening their wallets following promotional activity in the final months of 2024.
This is according to new data from Commonwealth Bank, which showed that its Household Spending Insights (HSI) Index was flat in January, unchanged at 153.4.
Modest spending increases were seen across six of the 12 spending categories, with the most notable uplifts seen in spending on motor vehicles (up 1.5 per cent), insurance (up 1.2 per cent), and health (up 1 per cent).
The biggest spending falls in January were in education (down 1.8 per cent), driven by reduced spending on universities, as well as hospitality (down 1 per cent) and household goods (down 0.9 per cent).
"The flat January HSI result was somewhat expected following the spike in spending we saw in the last three months of 2024 off the back of Black Friday, Cyber Monday and Boxing Day sales,” CBA senior economist Belinda Allen said. “Essentials made up the three highest spending categories in the month as consumers pulled back on discretionary spending.
“We expect the RBA to lower interest rates at their first meeting of the year next week which will help provide a boost to consumer spending over the coming months. We anticipate a total of 100 basis points of monetary policy easing throughout 2025 to drive an improvement in the consumer spending pulse."
In the household goods category, fashion led the charge ahead, but not clearly enough to lift spending month-on-month.
For the year to January, household goods spending rose by 3.9 per cent, down from 4.6 per cent in the year-to-December.
The largest lifts in annual spending occurred in online marketplaces, hardware stores, discount department stores, men’s and women’s clothing stores, and women’s clothing stores.
This was partly offset by reduced spending on newsagencies, tobacconists, bathroom retailers, and school and office supply stores.
On an annual basis, homeowners with a mortgage (up 3.0 per cent) have surprisingly – according to CommBank – seen a larger increase in spending compared to those who own their home outright (up 2.8 per cent), while renters continue to lag (up 2 per cent).
“The increase in spending by those with a mortgage can be attributed to the fact that not only are this cohort likely at a stage of life where they’re spending on essential items, they’re still dedicating a significant share of their wallet to recreation and entertainment,” Allen added.
The CommBank HSI index tracks month-on-month data at a macro level and is based on de-identified payments data from approximately 7 million CBA customers, comprising roughly 30 per cent of all Australian consumer transactions.