After declines in both January and February, CommBank’s Household Spending Intentions (HSI) Index has seen a rise of 8 per cent in March thanks to “significant” increases in consumer spending on transport and education.
The Index reported that in March, transport spending intentions were up by 19 per cent — 30 per cent year-on-year — as more workers returned to the office and more cash was being spent on public transport, car parks and taxis.
Commonwealth Bank of Australia (COM) Chief Economist Stephen Halmarick said spending on transport had almost returned to pre-pandemic levels.
“The increase in transport spending indicates more people are working from the office rather than from home, and this should have a positive impact on CBD economies,” Mr Halmarick said.
The HSI Index’s annual rate of growth continues to moderate, however, falling to 3.8 per cent in March — well below its peak of 15.2 per cent in August.
Increased spending in the entertainment, retail, travel and education sectors were contributors to the rise for March.
Education spending intentions were up 7.6 per cent for the month, with school and higher education fees the drivers.
Mr Halmarick said the rise stemmed from the reopening of international borders to overseas university students.
“Education is one of Australia’s biggest exports,” he said.
“The increase in education spending is a welcome development, largely supported by the return of international students to our shores.”
However, a dampener to consumer spending struck in the form of the continued tightening of monetary policy over the past twelve months, with analysts expecting a further tightening throughout the year.
“The slowdown in spending growth indicated the RBA’s consecutive interest rate increases are having a real impact on household spending,” Mr Halmarick added.
“Despite the decision to hold interest rates steady earlier this month, consumer budgets will tighten due to the lag in impact on both variable and fixed-rate mortgages.”
He said that as inflation sat at an estimated 7 per cent for the March quarter, real household spending was, in fact, negative.
“This reinforces the view that once you take into account inflation, taxes, and debt interest costs, real household disposable incoming is falling,” he said.
The HSI Index was launched in July 2019 to better understand how Australians were spending their money and how they intended to spend it.
It leverages CommBank’s spending and lending data with publically available Google trends search data, providing key insights into both current spending patterns and intentions.