The monthly CommBank Household Spending Insights Index (HSI) rose in May after falling in April, continuing the month-to-month spending volatility seen throughout 2024. Drinks industry growth was led by liquor stores, however spending declined in pubs and bars.

Spending on food and beverages was up 1.8% and spending in hospitality was up 1.7% (after falling by 3.8% in April).

The largest contributors to growth in food and beverage spending were supermarkets, liquor stores, butchers, bakeries and convenience stores.

The largest contributors to growth in hospitality were fast-food outlets, restaurants and food delivery services. However, this was partially offset by reduced spending in event hire and planning, function and event centres and pubs, taverns and bars.

Spending overall rose 1.1% in May following a 1% drop in April. While household spending rose in May, Commbank said spending has been soft since January with monthly gains averaging just 0.1%, pointing to a weak consumer environment. This compares to a monthly growth rate of 0.8% in the first four months of 2023.

Across the states and territories, all bar the Northern Territory recorded positive rates of growth in May, led by Queensland (+1.8%), Tasmania (+1.7%) and Victoria (+1.6%). The Northern Territory (+5.7%) and Western Australia (+5.6%) lead spending growth in the year to May, while softer growth has been witnessed in the ACT (+2.6%), Victoria (+3.7%) and NSW (+4.8%).

CBA Senior Economist Belinda Allen said: “Spending in May bounced back from April which continued the spending volatility we have seen throughout the year.

“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,” Ms Allen said.

“It is unlikely tax cuts commencing in the third quarter of 2024 will have a material impact on consumer spending and we are expecting households to save rather than spend their tax cut. 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.”

The data used in the ‘Commbank Spending Insights’ series is a combination of CBA Data and publicly available Australian Bureau of Statistics (ABS), CoreLogic and Reserve Bank of Australia data. 

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