- Household spending fell by 1.2% in April, driven by lower spending on petrol and public transport.
- The transport category saw the biggest fall as the fuel excise cut reduced petrol prices and free public transport came into effect in Victoria and Tasmania.
- Falls in consumer sentiment due to the conflict in Iran and higher interest rates have not yet translated into a sharp pullback in discretionary spending.
Australian household spending eased back in April as volatile petrol prices and cautious spending in the recreation category reversed the lift seen in March, the latest CommBank Household Spending Insights (HSI) shows.
But the oil shock resulting from the current Middle East conflict has not had the size of impact that was initially expected, Commonwealth Bank Head of Australian Economics Belinda Allen said.
"We have been expecting household spending to slow. But to date, weakness in sentiment due to the conflict in Iran and higher interest rates is not yet translating into a sharp pullback in discretionary spending," Allen said.
Nevertheless, broad measures of spending showed some cooling in April.
CommBank data shows total household spending fell by 1.2 per cent over the month, with a sharp pullback of 12.1 per cent in transport as petrol prices dropped following the fuel excise tax on 1 April, as well as free public transport in Victoria and Tasmania.
Of the 12 spending categories, six recorded a fall and six recorded gains in April, including rare falls in insurance and health, with health recording the first monthly decline since March last year.
Even after stripping out transport, overall spending was still down 0.2 per cent in April, indicating a softer month for spending, following the 2.9 per cent lift recorded in March.
"Petrol price movements continue to have a big impact on the month-to-month swing in household spending, and we expect households to do much of the heavy lifting over coming months in slowing spending and cooling inflation," Allen said.
"The April data was softer. But it's too early to judge whether this marks a broader trend," Allen said. "The key will be seeing if some of the weakness in recreation spending is recycled into other categories or pushed into savings."
CommBank data also shows the pace of annual growth in spending slipped back to 5.5 per cent in April, dropping from an 8.5 per cent spike in March. With 17.6 per cent annual growth, the utilities category claimed the biggest growth in spending in April after the end of the energy rebates, followed by transport (+9.8 per cent) due to petrol prices.
"It was this time in 2025 where we saw spending in the HSI really start to show momentum after the cumulative impact of interest rate cuts and income tax cuts at that time," Allen said.
"We can see the step down in pace of growth most clearly in some of the discretionary categories, in particular recreation. The pace of annual growth now sits in negative territory at 0.4 per cent, the weakest since February 2021."
Discretionary spending mixed in recreation and hospitality
Recreation spending declined sharply by 2.6 per cent in April in seasonally- adjusted terms, recording the second-weakest result out of any category, behind only transport.
Through the year, recreation was the only category with an annual contraction in growth.
"It appears households may be lowering their travel related consumption in the face of higher costs and uncertainty from the conflict in Iran. This is picked up in the broader recreation category," Allen said.
"Declines in annual spending growth were recorded in travel related categories such as online travel bookings, ticketing services, travel agencies, commercial airlines and accommodation."
Yet while spending on recreation went backwards in April, spending on hospitality lifted by 0.2 per cent, with the annual growth rate for the category rising to 6.2 per cent in April from 5.5 per cent in March.
Stronger spending over the year to April was driven by gains in food delivery services, fast food outlets, restaurants, pubs, taverns and bars and takeaway food.
Spending muted across states in April
At a state level, Tasmania was the only jurisdiction to record spending growth in April with a lift of 0.2 per cent. South Australia and Victoria recorded flat results, while Western Australia, Queensland, New South Wales and the Australian Capital Territory all saw a 0.2 per cent monthly decline.
Over the year, spending growth remained strongest in the Northern Territory and Western Australia.
"The conflict in Iran presents asymmetric risks to Australia's state economies," Allen said.
"Those states more heavily reliant on diesel intensive industries such as mining, agriculture and freight, are more exposed to the direct shock of higher fuel prices. WA, the NT, Tasmania and Qld are more exposed."
