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The latest CommBank Household Spending Insights (HSI) Index rose 0.9 per cent in March, signalling a modest recovery in consumer activity, driven by increased spending on recreation and hospitality.
While this uptick is a positive sign, economists cautioned that it may be too early to declare a sustained rebound, particularly with lingering economic uncertainties.
For brokers, these spending trends provide valuable insights into borrower behaviour, regional economic shifts, and potential future impacts of interest rate movements.
The March data revealed broad-based spending increases across all 12 categories, with the most significant gains in:
- Education (up 4.3 per cent).
- Insurance (up 1.6 per cent).
- Recreation (up 1.4 per cent).
- Hospitality (up 1.2 per cent).
The return of winter sport, such as the NRL and AFL, has helped boost spending. The Melbourne Grand Prix also played a role in the uplift.
“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,” said CBA senior economist Belinda Allen.
Over the past 12 months, spending grew 5.6 per cent. In this time, essential spending outpaced discretionary:
- Insurance (up 15.3 per cent).
- Education (up 12.7 per cent).
- Health (up 11.9 per cent).
- Household services (up 9.2 per cent).
Transport fell 3.3 per cent over the year. This was reportedly due to lower fuel prices.
The data also revealed that renters were under pressure, while home owners were more resilient.
Spending for renters year on year grew 2 per cent. Mortgage holders, on the other hand, grew by 3.2 per cent and outright home owners, 3.5 per cent.
This suggests that borrowers with mortgages remain more financially resilient than renters, but future rate cuts could further ease pressure on household budgets.
With the RBA expected to provide rate relief in 2025, borrowing capacity and refinancing activity could see a surge.
“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,” Allen said.
“We expect interest rate cuts over the coming year to see consumers loosen their purse strings, but global uncertainty from the US 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.”
While March’s spending rebound is a positive sign, broader economic risks remain. Mortgage brokers should monitor RBA policy shifts, regional trends, and borrower spending patterns to better advise clients in a changing market.
