SYDNEY (Reuters) – Australia’s household spending rebounded in August, led by gains in the education, transport and recreation categories, data from the Commonwealth Bank of Australia showed on Wednesday, a sign of consumer resilience that bodes well for the economy.
The CommBank Household Spending Insights (HSI) index rose 0.7% to 137.0 in August from July when it was flat. The annual rate of increases, however, remained subdued, up just 2.3% and a world away from its peak of 18% last year.
A surge in international students helped education spending grow at a solid pace of 2.8% for the month, while recreation expenditure rose 1.9% thanks to the FIFA Women’s World Cup and a number of big-name concert tours.
Spending on household goods rose for a second straight month after prolonged weakness.
Australian consumers have been tightening belts in the face of elevated costs of living and a surge in mortgage payments after the central bank has raised interest rates by 400 basis points to tame inflation.
Retail sales rebounded in July after a sharp fall the previous month. However, the underlying trend remained subdued, making little contribution to economic growth in the second quarter.
“Monetary policy is now restrictive and financial conditions will continue to tighten in the months ahead,” said Stephen Halmarick, chief economist at CBA.
“We continue to expect household spending to weaken further over the remainder of 2023 and into 2024.”
The HSI index is based on 12 spending categories and uses payment data from about 7 million CBA customers, comprising roughly 30% of Australian consumer transactions.
The seasonally adjusted index was launched last month, building upon a previous data series but better aligned with Australian Bureau of Statistics data.
(Reporting by Stella Qiu; Editing by Jamie Freed)
