Australian households kicked off 2026 in spending mode, yet the latest data suggest mortgage brokers should treat January’s resilience as temporary rather than a guaranteed boom.
This comes as consumer sentiment remains subdued, with the Westpac–Melbourne Institute index under 100 and most households still expecting interest rates to rise, even after RBA’s February rate hike.
The latest CommBank Household Spending Insights (HSI) Index shows consumption rose 0.5% in January, extending a 16‑month run of growth and leaving annual spending 5.6% higher after a strong finish to 2025.
“We’ve now seen consistent monthly spending growth for well over a year, which points to steady underlying demand across the economy,” CBA senior economist Ashwin Clarke said.
But Clarke also cautioned that “while consumers have continued to spend, higher interest rates and easing income growth are likely to slow that momentum as the year progresses.”
Recreation was one of the strongest categories in January, with spending up 1% in the month and 7.6% over the year as households splashed out on tennis, festivals, and travel. Ticketing services, tourist attractions and travel agencies all saw gains, signalling that many borrowers are still willing to pay for experiences.
Household goods spending also rose 0.5%, with clothing, hardware, and online marketplaces all contributing. That rebound beyond Black Friday and Christmas discounting points to consumers still prepared to upgrade and refresh, supporting retailers and the small businesses many brokers service.
CBA data show quarterly wage growth at 0.8% and annual growth at 3.1%, with Western Australia leading and the eastern states holding steady.
“While wage growth is firm but not excessive, weak productivity growth means businesses continue to face elevated labour cost pressures,” CBA economist Stephen Ottley said, adding: “This underpins our assessment that labour market conditions remain tight and are still contributing to inflation.”
A still‑tight labour market is helping keep arrears in check, but it also reinforces the case for higher‑for‑longer interest rates.
Not all spending strength is discretionary. Utilities recorded the largest monthly jump, surging 3.7% in January and 15.6% over the year as federal energy rebates were wound back and power bills reset higher.
CommBank’s data show households with a mortgage are leading spending growth at around 3.6% annually, ahead of renters (2.6%) and outright owners (1.4%). That makes mortgagors both the most active and the most exposed segment as higher rates, rising mortgage payments, and persistent cost‑of‑living pressures build through 2026.
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