CBA Index Shows Spending Soft But Holding Up

CBA’s Household Spending Insights (HSI) series based on its card transaction data rose 0.7% m/m in August to be up 2.3% y/y after rising an upwardly-revised 0.6% m/m and 1.9% y/y the previous month, but growth remains below inflation. The most recent 3-month period has shown better spending growth than the previous three. HSI has a very close correlation with nominal retail sales of around 90% but August sales would also need to rise 0.7% m/m for the annual rate to hold steady at 2.1%. CBA expects consumption to continue slowing over 2023 and into 2024.

• In August services spending underperformed goods rising 1% m/m compared with 2.4% and in annual terms they are now similar at 1.2% y/y and 1% respectively. Retail spending rose 0.2% m/m and 0.9% y/y and non-retail 1.9% m/m and 5.8% y/y. Discretionary spending outperformed essential rising 3% y/y compared with 2.5%.
• CBA reports that spending was driven by education due to the surge in overseas students and transport (petrol prices rose 8.9%m/m) and recreation from the Women’s FIFA World Cup. All categories saw a nominal increase apart from utilities (-0.8%) and hospitality (-2.1%).
• The home buying index rose 0.6% m/m in August after 2.1% to be down 13% y/y following -9% in July. CBA believes that this series will improve given that it doesn’t expect any further rate hikes. It is forecasting house prices to rise 7% in 2023 and 5% in 2024.
• See CBA HSI report here.