Household spending has fallen for the first time in 17 months as cost of living pressures and rising interest rates hit hard.
The CommBank Household Spending Insights (HSI) Index for February 2026, released this week, last recorded a spending fall in September 2024.
The bank described the latest index trend as a “significant shift” in behaviour.
CommBank Head of Australian Economics Belinda Allen said spending had been remarkably resilient over the past year off the back of stronger household incomes.
“A decline after 17 months of growth is notable and suggests households may be starting to pull back,” she said.
“It’s too early to say whether February marks the start of a sustained slowdown, but we are seeing softer momentum in discretionary categories. That’s typically where households adjust first when budgets come under pressure.”
The Index declined 0.5 percent in February, with spending falling across half of the 12 categories measured. Annual growth also slowed to 4.9 percent, the weakest pace since August 2025.
Spending on essential items rose slightly in February, while discretionary spending was flat after stronger growth in January.
“Over the year, discretionary spending growth has eased to 5.7 percent, down from 6.6 percent,” CBA said in a statement.
“The slowdown in discretionary categories mirrors recent official data and may signal households are becoming more careful as cost-of-living pressures and higher interest rates continue to weigh on budgets.”
“More modest spending growth will help bring the economy back into balance and inflation back towards target, but rising energy prices remain a downside risk for households this year.”
