Australians increased spending on travel and gyms last month, propping up sluggish overall household spending, as renters continued to struggle.
The June CommBank Household Spending Insights (HSI) Index rose by 0.6 percent, driven by increased spending on recreation (+3.2 percent) and hospitality (+2.1 percent).
CBA Chief Economist Stephen Halmarick said online travel bookings, fitness clubs and gyms, and sporting goods stores bumped up the recreation spend.
“However, on an annual basis this category has seen spending growth of just 0.2 percent,” Mr Halmarick said.
He said hospitality is up 3.8 percent for the year with pubs, taverns and bars and food delivery services the biggest drivers of this month’s spending increase.
Mr Halmarick said said the annual HSI growth rate remains subdued at 3.9 percent for the year, with spending on essentials such as insurance (+8.8 percent), utilities (+6.8 percent) and transport (+5.7 percent) seeing the biggest jumps in the year to June.
“This suggests consumers were still dedicating a significant share of their wallet to essential items.”
He said the June report also highlighted significant spending differences across home ownership type.
“Renters continue to be challenged, with spending declining 0.9 percent in the year to June compared with spending increases for those with a mortgage (+1.5 percent) and outright owners (+2.1 percent).”
Mr Halmarick said across the states, the ACT recorded the strongest growth in spending (+1.5 percent), followed by NSW and SA, which both recorded a growth of 0.7 percent.
He said WA (+0.6 percent), Victoria (+0.5 per cent), Queensland (+0.4 percent) and Tasmania (+0.3 percent) all recorded a more modest growth.
“In the year to June, the Sunshine State has seen the strongest spending growth (+5.5 percent), followed closely by WA (+5.3 percent) and SA (+5.1 percent).”
Mr Halmarick said while consumer spending remained relatively weak, the path of monetary policy would be dependent on several key pieces of economic data in the coming weeks.
“While it was somewhat surprising to see household spending rise for the second month in a row, we have witnessed a significant disparity in spending behaviours across home ownership categories, as renters pull back on spending in the year to June while mortgage holders and outright owners have increased spending,” Mr Halmarick said.
“This suggests younger Australians, who are more likely to be renting, are tightening their wallets and likely spending more on essentials, given these are the fastest growing spending categories so far this year.”
