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Spending stays flat, still,
Thrift and discount rule the day,
Cautious wallets hold.
Aussie consumers seek out discounts as household spending remains flat
The CommBank Household Spending Insights (HSI) Index remained unchanged in July, sitting at 148.2, indicating a flat consumer spending landscape.
The data suggests that consumers are prioritising discount shopping options, with modest spending increases seen across seven of the 12 spending categories. The most notable uplifts were observed in Household Goods (+1.3 per cent), Recreation (+0.9 per cent), Communications and Digital (+0.9 per cent), and Insurance (+0.9 per cent).
CBA Chief Economist Stephen Halmarick said: “There were several sporting events in July – such as the NRL State of Origin decider and the Wallabies rugby tests – that likely boosted recreational spending however this wasn’t enough to offset weakness across other categories of the Index, as consumers continuing to cut back.”
The thriftier shopper led the increases in Household Goods, with spending at discount stores and online marketplaces on the rise. “We’re also seeing changes in shopping behaviours within categories, as consumers look for cheaper alternatives, like second-hand bargains and discount store sales,” Halmarick added.
The biggest falls in spending were seen in Hospitality (-2.4 per cent), Utilities (-1.3 per cent), and Food & Beverage (-1.2 per cent). “Hospitality spending dropped in July and has been the weakest category over the past year, as consumers cutback on visiting cafes and bars,” Halmarick said.
The annual HSI growth rate increased to 4.5 per cent for the year, with the biggest increases seen in essential services such as Insurance (+15.9 per cent) and Health (+13 per cent). However, spending disparity remains across homeownership status, with spending by renters up just 0.3 per cent for the year to July compared to mortgage holders (+3.3 per cent) and those who own their home outright (+4 per cent).
“As income tax cuts have only just taken effect, we will likely have a clearer picture of impacts on spending behaviour over the coming months. More broadly, we expect that softer economic data, a further deceleration of inflation, and easing of monetary policy by overseas centrals banks will see the RBA begin to cut interest rates in the months ahead,” Halmarick said.
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