CBA Highlight Consumer Reaction To Rates & Cost Of Living Pressures

CBA note that their “internal credit & debit spending data to the 29th July shows that consumers are reacting to higher interest rates and cost of living pressures by moderating consumer discretionary spending. Smoothing out volatility due to public holidays and the end of financial year, the peak in spending according to CBA data looks to have occurred in mid‑May, just as the RBA started to lift the cash rate. Spending on recreation, eating & drinking out, general retail and household goods have all eased in recent months. Essential spending categories that are less price elastic have seen spending hold up, with transport, utilities and food all remaining resilient. Spending on transport has eased slightly as the price of fuel has declined from recent highs, providing consumers with some relief. Predicted increases in the price of energy however will place more cost of living pressure on households, particularly lower income households. We will likely see spending growth on utilities push higher. Rebates in WA and Queensland will add some volatility to energy spending figures.”