Household spending has slipped for the first time since September 2024, signalling a turning point for mortgage brokers working with rate‑sensitive clients.
CommBank’s Household Spending Insights (HSI) Index fell 0.5%, ending a 17‑month run of growth and slowing annual spending to 4.9%, the weakest pace since August 2025.
“Spending has been remarkably resilient over the past year, supported by stronger household incomes,” CommBank head of Australian economics Belinda Allen (pictured) said in a media release. “A decline after 17 months of growth is notable and suggests households may be starting to pull back.”
Spending fell across half of the 12 categories tracked, led by a 6.4% drop in utilities. Education also declined 1% in the month and is now down 4% over the year, the weakest annual outcome of any category. Recreation and transport slipped in February, although recreation remains one of the stronger performers over the past year, while health, household services, food, and communications recorded modest gains.
Essential spending edged higher in February, but discretionary spend was flat after a strong January. Over the year, discretionary growth has eased to 5.7% from 6.6%, mirroring official data showing households trimming lifestyle and non‑essential outlays first.
Despite the softer tone, households with a mortgage still show the fastest annual spending growth at 4%, compared with 1.6% for renters, and 0.8% for those who own their home outright.
“We have been expecting consumption growth to moderate in 2026 as households contend with higher interest rates, persistent inflation, and slower income growth,” Allen said.
More modest spending growth should help bring the economy back into balance and inflation back towards target, although rising energy prices remain a key risk for household cash flow.
CommBank’s Wage Insights series shows wages rising 0.7% over the three months to February, slightly softer than late 2025, with annual growth steady at 3.1%.
“The CommBank Wage Insights series slowed in February with the quarterly rate easing to 0.7%,” Allen said. “The annual rate was steady at 3.1%,” indicating wages have yet to respond meaningfully to tighter labour market conditions.
Labour Insights data point to around 21,000 jobs added in February, with employment growth back to pre‑pandemic norms and unemployment holding near 4.1%.
For mortgage brokers, the combination of softer spending, steady wages, and a still‑tight jobs market aligns with expectations that the Reserve Bank will take a ‘wait‑and‑see’ approach.
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