Household spending edged up just 0.3% in June, with the CommBank Household Spending Insights (HSI) Index pointing to a broader pullback as inflation and elevated interest rates weigh on consumers, even as End of Financial Year sales rolled through.
While 10 of 12 spending categories recorded gains, growth was uneven. Utilities (1.4%) and education (1.1%) led the way, boosted by seasonal billing cycles and the timing of university fee payments.
Retail spending on household goods, however, eased to 0.2% in June from 0.6% in May, despite EOFY promotions. Hospitality spending grew only 0.1%, down from 0.9% in May, suggesting June's sporting events failed to meaningfully lift discretionary outlays.
Spending growth varied sharply by age. Australians aged 65 and over led annual growth at 10.1%, followed by the 55–64 cohort at 6.2%. By contrast, spending growth was softer among cohorts more likely to hold a mortgage, with 35–44- and 45–54-year-olds recording 4.5% annual growth, and 25–34-year-olds growing just 4.2%. Growth among 18–24-year-olds nearly halved year-on-year, from 9.9% to 5.4%.
CommBank's head of Australian economics, Belinda Allen (pictured), said the divergence between mortgage-belt and older cohorts reflected the broader pressures now weighing on household budgets.
"The softening we are seeing in the CommBank HSI is broadly in line with our expectation that household spending will slow over the remainder of this year," Allen said in a media release. "…the downturn in the housing market and higher interest rates continue to weigh on consumer spending."
The caution comes even as sentiment ticks up: Westpac-Melbourne Institute data shows consumer sentiment rose 4.1% in July to 83.9, still in the bottom 10% of results over the survey's 50-year history. Fewer consumers now expect further mortgage rate rises, down to 60% from 66% in June, but property confidence has weakened, with house price expectations at a three-year low and only 47% expecting prices to rise over the next year.
Annual regional household spending growth accelerated over the year to June, while metro growth slowed, led by regional Queensland and Western Australia. Metro NSW, Victoria, and the ACT recorded the weakest growth, a pattern Allen linked to those jurisdictions' softer home price performance over the past 12 months.
Recreation spending also decelerated sharply, from 2.3% growth in May to just 0.2% in June, as softer outlays on ski resorts, camping stores, museums, galleries, and tour operators weighed on the category. Poor early-season weather hit ski resort spending in particular, though annual gains in online travel bookings, airlines, gyms, and sporting goods stores kept the category in positive territory.
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