Australians had another “soft” spending month in March with event outlays almost halving from February when numbers were buoyed up by the Taylor Swift concert splurge, CBA’s monthly survey of its 7 million retail customers shows.
The overall CommBank household spending index was up 0.2% in March from the previous month, to 141.8 points. It remained below November’s level, when the Reserve Bank last raised its key interest rate.
Spending was up in 10 of 12 categories, led by a 4.2% rise in transport outlays. Petrol prices were up 2.5% in the first March since 2016 that fully took in the Easter break rather than it falling in April.
“There were really big increases on things like supermarkets and liquor stores, and butchers and bakers,” CBA’s chief economist, Stephen Halmarick, said. “We can conclude from our numbers for January, February, March that the soft environment has just continued into the first quarter of 2024.”
Recreation spending sank 6.8% for the month. Spending on functions and events retreated 42%, reversing part of February’s 115% spike that had been propelled by Swift’s seven performances in Melbourne and Sydney.
“If you look at the annual change in recreation, that’s up only 0.4%,” Halmarick said. “We’re not spending more on recreation, we just kind of reallocated where we were spending.”
From a year earlier, the spending index came in at 3.4%, unchanged from February, and in line with the annual consumer price inflation rate for both those months.
The CBA survey captures the spending behaviour of more than a quarter of Australia’s population. It adds to the evidence that the economy is limping into 2024 after per capita activity shrank for the final three-quarters of last year.
The bank, Australia’s largest, is yet to finalise its forecast for inflation in the first quarter but a number of “approximately 3.5%” is likely. The Australian Bureau of Statistics will release the closely watched quarterly CPI figures on 24 April.
Overnight, the US reported inflation came in at 0.4% for March – or higher than the 0.3% expected – and 3.5% from a year earlier.
Ahead of the release, Halmarick said CBA had already pushed back its expectation of when the US Federal Reserve would start cutting its key interest from May to July. “So if the Fed rate cuts are delayed much beyond July … that could have an impact on the RBA’s timing as well,” he said.
The CBA is among the more “dovish” of banks, with its economists still expecting the RBA to cut interest rates three times in 2024, starting at the central bank’s board meeting in late September.
Household goods spending was the other category to register a drop in spending in March, easing 1.7%. This category had fallen for three of the past four months.
From a year earlier, spending rose the most for insurance, up 10.5%. Health outlays were up 6.5%, with spending on utilities increasing 6.2% and education up 5.3%, the CommBank survey showed.
