Thursday, December 1 2022

The CommBank HSI rose in May in most categories, but discretionary spending began to decline as the cost of living rose.

The Retail category grew by 0.5% m/m in May and by 7.4% y/y, which can be interpreted as a weak result given seasonal factors and rising prices.

Consumer spending intentions as measured by the CommBank Household Spending Intentions Index rose 2.9% in May to 115.9, although discretionary spending appears to be slowing after recent rate hikes.

The index – which combines Commonwealth Bank of Australia (CBA) payments data and Google Trends search information – has regained ground after falling in April, with increases in seven of its 12 categories in May, including including home buying, fitness and health, and transportation, alongside falls. in entertainment, travel and insurance expenses.

The increase in home loan applications and housing searches on Google led to a 14.8% increase in home purchase spending intentions, a 3.3% drop in May 2021 and a 13% drop. from their peak in March 2021. to recent interest rate increases by the Reserve Bank of Australia.

More Australians on the move and higher petrol prices led transport in spending intentions, rising 11.7% in the month and 70.1% in May 2021. Intentions health and fitness spending rose 12.8% in May, up 7.3% on the year.

Travel spending intentions fell 1.5% in May after hitting a post-Covid high in April, but remain 52.3% above May 2021. A drop in travel-related transactions and Google searches was no surprise after a busy holiday season in April, which also explains a 4.1% drop in entertainment spending intentions in May.

ABC senior economist Belinda Allen said consumer spending habits continued to change after Covid and showed signs of slowing in response to higher interest rates and after incredible momentum after the easing of pandemic restrictions at the end of 2021.

“Household spending intentions rebounded in May after falling in April due to the number of public holidays. Given this seasonal volatility, the annual change in the CommBank HSI best reflects the state of our economy and is up 7.9% on the year – albeit due to higher prices rather than larger volumes,” she said.

“Rising prices and rising interest rates will have an impact on household spending. We see early indicators of weakness in the ABC’s credit and debit card spending data, with discretionary spending on recreation, clothing and footwear, and household furnishings and equipment down slightly and increased spending on food and drink from a peak.

“The RBA’s rate hike cycle is more aggressive than expected and we have revised our interest rate forecast up, as well as downgraded our outlook for economic growth and our forecast for house prices,” Allen said.

The ABC’s economics team has revised its forecast following the larger-than-expected rise in the exchange rate last week. The team raised its cash rate target to 2.10% from 1.60% by the end of 2022, cut its GDP growth forecast for 2022 to 3.5% from 4.7% and expects national house prices to drop about 15%. by the end of 2023.

The CommBank HSI Index combines analysis of ABC payment data (Australia’s largest consumer spending dataset covering approximately 40% of payment transactions), loan application information and publicly available Google Trends search activity data. To access this powerful insight into spending trends, visit

+Household spending intentions index – June 2022

What you need to know

The information in this press release is for informational purposes only and provides general market information, and is not intended to be an investment research report. This press release has been prepared without taking into account your objectives, financial situation (including ability to bear a loss), knowledge, experience or needs. Before acting on the basis of the information contained in this press release, you should evaluate its appropriateness and, if necessary, seek appropriate professional or financial advice, including tax and legal advice. The data used in this press release is a combination of “CBA transaction data” and Google Trends™ data. Google Trends is a registered trademark of Google LLC. The term “CBA Transaction Data” refers to Commonwealth Bank of Australia (“the Bank”) proprietary data which originates from the Bank’s internal systems and may include, but is not limited to, card transaction data. credit, credit data and applications. All client data used or depicted in this press release is anonymized and aggregated before analysis, and is used and disclosed in accordance with the Bank’s Privacy Policy Statement. The Bank takes reasonable steps to ensure that its proprietary data is accurate and that all opinions, conclusions or recommendations are reasonably held or made at the time of compiling this press release. As the statistics only reflect data from the Bank, no representations or warranties are made as to the completeness of the data and they may not reflect all market trends.

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