Key takeaways
- Household spending rose 0.5% in January, marking 16 consecutive months of growth
- Recreation spending lifted 1.0%, supported by major summer events including the Australian Open
- Utilities spending jumped 3.7% as energy rebates were scaled back
- NSW recorded strongest monthly spending growth
Australian households started 2026 in spending mode, with summer events and a solid job market helping drive another monthly lift in consumption.
The latest CommBank Household Spending Insights (HSI) Index shows spending rose 0.5 per cent in January, marking 16 consecutive months of growth. Annual spending growth eased slightly to 5.6 per cent, following a strong finish to 2025.
"We've now seen consistent monthly spending growth for well over a year, which points to steady underlying demand across the economy," CBA Senior Economist Ashwin Clarke said.
"While consumers have continued to spend, higher interest rates and easing income growth are likely to slow that momentum as the year progresses."
Wage momentum remains solid across the start of the year
Australia's wages growth held steady in January, with CBA data showing quarterly wage growth at 0.8 per cent and annual growth at 3.1 per cent. Overall, wages have been tracking broadly sideways, though there has been a gradual lift in quarterly outcomes since mid-2025
Western Australia continued to report the strongest wage gains, while outcomes across the eastern states remained steady.
"While wage growth is firm but not excessive, weak productivity growth means businesses continue to face elevated labour cost pressures," Ottley said. "This underpins our assessment that labour market conditions remain tight and are still contributing to inflation."
Consumers splash out on summer events
Recreation was one of the strongest-performing spending categories in January, rising 1.0 per cent in the month and sitting 7.6 per cent higher over the year.
Consumers splashed out on tickets, travel and fitness, with major events including the Australian Open tennis and summer festivals drawing strong crowds. Spending rose across ticketing services, tourist attractions and travel agencies, reflecting households' continued appetite for summer experiences.
The rebound in household goods spending - up 0.5 per cent - suggests consumers' willingness to spend extended beyond seasonal discount periods like Black Friday, with strength across clothing, hardware and online marketplaces.
Utilities surge as rebates wind back
While Australians splashed out on summer fun, a large chunk of growth in their spending was driven by utilities, which recorded the largest monthly increase across categories, lifting 3.7 per cent in January, following another strong lift in December.
The jump reflects the scaling back of federal energy rebates, with households facing higher electricity bills as subsidies expired. Over the year, utilities spending is up 15.6 per cent, with outlays on electricity and gas driving the bulk of the increase.
States diverge as NSW leads monthly gains
Spending patterns varied across the country, with New South Wales recording the strongest monthly growth, up 0.7 per cent. The ACT, Victoria and Western Australia also posted solid gains, while Queensland and South Australia recorded more modest increases.
On an annual basis, Western Australia and Queensland remain the strongest performers, with spending up 7.5 per cent and 6.1 per cent respectively.
Outright owners trail the spending pack
Spending growth has been strongest among households with a mortgage, with annual spending running at around 3.6 per cent, compared with more moderate growth among renters (2.6 per cent) and outright owners (1.4 per cent). While all three groups have recorded spending increases across most categories over the past year, recent data suggests growth is beginning to stabilise. Mortgagors remain the most sensitive to further interest rate increases as 2026 unfolds.
Headwinds building later in 2026
CBA's Clarke said the early-2026 momentum reflected strong household fundamentals. But cautioned that economic conditions are likely to tighten.
"Households have been supported by a solid labour market and healthy balance sheets, but higher interest rates and easing wage growth are expected to slow spending as the year progresses," Clarke said.
The January data predates the Reserve Bank of Australia's February rate increase, and CBA economists expect the RBA to increase rates again in May 2025. Rising mortgage payments, moderating income growth and persistent cost-of-living pressures are all expected to dampen spending growth over time.
While consumers began 2026 on the front foot, the pace of spending is likely to moderate as those headwinds build, Clarke said.
Read the full Household Spending Insights report here .
