Consumer spending across household goods has softened in March this year compared to February.
This is according to new data from Commonwealth Bank, which showed that its Household Spending Insights (HSI) Index rose 0.9 per cent month-on-month in March, following two months of subdued spending.
The lift was buoyed by gains in recreation and hospitality spending off the back of the Melbourne Grand Prix and the return of the winter football codes. Household goods spending, however, reported the lowest monthly growth of 0.1 per cent across the 12 spending categories.
Education spending led the charge month-on-month, surging 4.3 per cent amid rising tuition fees and the start of the academic year.
Notable uplifts were also seen in insurance (up 1.6 per cent), recreation (up 1.4 per cent), and hospitality (up 1.2 per cent), with the latter showing its first lift since December.
“While it’s encouraging to see a rebound in spending this March, particularly across discretionary categories like recreation and hospitality, it's premature to call this a turning point, as the overall pace of spending growth remains lower than the final quarter of 2024,” CBA senior economist Belinda Allen said.
“We expect interest rate cuts over the coming year to see consumers loosen their purse strings, but global uncertainty from the U.S tariffs may impact this recovery.
“It’s worth noting Australia is well placed to weather the global economic volatility and remains in a structurally sound position with limited direct impacts from the US tariffs. At the same time, the RBA has room to cut rates if required.”
Over the past 12 months, overall household spending was up by 5.6 per cent, with household goods spending holding a more modest year-on-year lift of 4.7 per cent.
This modest lift in household goods was driven by online marketplaces and department stores – both low-price and premium. Hardware stores, clothing stores and furniture stores also recorded large lifts in spending.
The greatest falls were in bathroom retailing, used and second-hand goods stores, tobacconists and online deals.
The strongest growth across the other spending categories were concentrated in essential services where inflation remains elevated and premiums have risen, including insurance (up 15.3 per cent), education (up 12.7 per cent), health (up 11.9 per cent) and household services (up 9.2 per cent).
In contrast, transport was down 3.3 per cent annually, led by lower petrol prices.
Renters continue to show the weakest spending growth, with the annual rate of spending in original per capita terms rising by 2.0 per cent, well below owners with a mortgage (up 3.2 per cent) and those who own their home outright (up 3.5 per cent).
“Queensland saw the softest growth rate in March, with spending rising just 0.1 per cent following ex-tropical cyclone Alfred," Allen said.
Spending gains were led by South Australia (up 1.2 per cent) and the Northern Territory (up 0.9 per cent).
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.