Consumer spending in Australia exhibited mixed trends in the early months of 2025, according to recent insights from NAB and CommBank.
Both banks have tracked the nuances of spending behaviours that oscillate between restraint and modest growth across different sectors and regions.
NAB’s analysis, spearheaded by Alan Oster (pictured above left), group chief economist, suggested a restrained consumer environment in February.
The bank’s data highlighted a slight decrease of 0.3% in overall consumer spending, primarily due to a reduction in service expenditures.
Conversely, retail spending showed a minor recovery, with a month-on-month increase of 0.4%, buoyed by rises in goods purchases and dining out, which reflect a selective enhancement in consumer confidence in specific retail sectors.
CommBank offers a granular view into how specific categories and states are performing.
The bank’s Household Spending Insights indicated a 0.2% dip in February, with notable pullbacks in recreation and hospitality spending around Valentine’s Day, which failed to stimulate significant commercial activity this year.
This trend underscored a shift towards essential spending, with Belinda Allen (pictured above right), CBA’s senior economist, noting that consumers are prioritising essential over discretionary expenditures amidst ongoing economic pressures.
According to data from NAB, consumer spending patterns across Australia displayed significant regional variations in January.
Western Australia (WA) was the only state to show an uptick in spending, with a modest increase of 0.1%. In contrast, South Australia and the Northern Territory experienced the sharpest declines, with spending falling by 1.8% and 0.9% respectively.
Smaller decreases were observed in Victoria (VIC) and New South Wales (NSW), where spending dipped by 0.2% and 0.1%, respectively.
CommBank’s insights painted a similar picture of disparity, but on an annual basis.
The CommBank index revealed that while some states like WA (+2.3%), SA (+2%), Queensland (+1.9%), and NSW (+1.7%) showed positive growth, others such as the ACT and Tasmania experienced declines of -1.6% and -0.2%, respectively. Victoria’s spending remained relatively flat at 0.7%, indicating a varied economic performance across the country.
On the business front, NAB observed a 2.2% decline in business credits in February, although there was an 8.9% increase over the past year, excluding the volatile sectors of mining and agriculture.
This suggests that while immediate monthly figures may show declines, the year-long perspective remains more stable.
Both NAB and CommBank anticipate that the coming months could see alterations in consumer spending patterns, especially with potential RBA interest rate adjustments on the horizon.
CommBank predicts that rate cuts expected in May could rejuvenate spending, especially as inflation aligns closer to target levels.
