The CommBank Household Spending Insights (HSI) Index rose 0.8 per cent in July, driven by spending on Recreation (+1.8 per cent) and Hospitality (+1.5 per cent), which were both boosted by the visiting British & Irish Lions and State of Origin decider during the month.
The past five months of steady spending growth suggest consumers are becoming more confident and willing to open their wallets, according to CBA Senior Economist Belinda Allen.
"The British & Irish Lions rugby tour and State of Origin decider helped boost spending in July as fans spent up on travel, entertainment and accommodation," said Ms Allen.
"We have been anticipating a lift in household spending for some time, supported by rising real disposable incomes, increased household wealth, and a resilient labour market. Although the recovery has taken longer than expected to materialise, the consistent growth in recent months gives us confidence that momentum is building.
"We expect a further pickup in spending through the rest of this year and into next, helping to drive a broader economic recovery."
Where else did people spend in July?
Ten out of the twelve categories recorded growth in July, as consumers splashed out on travel bookings, accommodation and eating and drinking out, with major sporting events a key driver. Beyond Recreation and Hospitality, other spending categories recording gains during the month included Motor Vehicles (+1.4 per cent), Insurance (+1.2 per cent) and Health (+1.1 per cent). Spending on Education was flat, and Utilities (-0.5 per cent) was the only category to see a fall during the month.
What areas have seen the biggest spending growth over the year?
The HSI Index has risen 6.4 per cent over the year, with the biggest gains occurring across Communications & Digital (+10.9 per cent), Recreation (+10.3 per cent) and Hospitality (+10.0 per cent). Education is now the weakest category over the year (-1.8 per cent) while spending on Utilities is now in positive territory as cost of living energy subsidies are gradually wound back.
"Strong growth in spending on recreation and hospitality over the year underscores that consumers are prioritising experiences and being deliberate about their spending choices. This was especially evident in July, when the British & Irish Lions tour and the State of Origin decider drove a surge in spending on these categories," said Ms Allen.
What does this mean for interest rates?
"Following the August interest rate cut, we expect the RBA to cut the cash rate once more in November to 3.35 per cent. A lower rate environment should help fuel consumer optimism and spending in the year ahead, and into 2026," commented Ms Allen.
Go to CBA Newsroom for the latest news and announcements from Commonwealth Bank.
