CBA data justifies pause in RBA rate cuts
Australian consumer spending ticked higher in October, with the latest Commonwealth Bank Household Spending Insights (HSI) Index rising 0.6%, maintaining September’s pace and marking 13 consecutive months of growth.
The resilience of Australia householding spending is nothing short of “remarkable”, said CBA’s head of Australian economics Belinda Allen (pictured). However, “sustained inflationary pressure could impact consumer choices going forward”, she added.
Allen’s comments echo a report recently released by economic research firm e61 Institute, which found that, despite the RBA implementing one of its most rapid tightening cycles in decades following the COVID-19 pandemic, Australian households reduced their expenditure by only a modest margin.
“Household spending barely flinched,” said report co-author Gianni La Cava. “Australia's experience shows that when mortgage flexibility and large savings buffers are in play, the transmission of monetary policy may become weaker and slower.”
The research attributed this to mortgage holders using offset accounts to maintain their spending levels.
RBA to hold
This sustained resilience has sparked inflation concerns, with Allen noting that the recent strength in spending “is likely being driven partially by price increases rather than purely higher consumption volumes”.
“That’s important because it complicates how we interpret household resilience and how the Reserve Bank reads the economy,” Allen added.
Inflation-affected categories such as utilities (+13.8%), communications and digital (+10.1%) and hospitality (+9.1%) showed the steepest annual gains.
The removal of energy subsidies, combined with evolving digital habits and food delivery trends, are contributing to the uptick.
Queensland (+7.9%) and Western Australia (+7.5%) saw the strongest annual growth, while Tasmania lagged at 3.1%.
Following three interest rate cuts in 2025, CBA expects the RBA to hold the cash rate at 3.6% for the foreseeable future, aligning itself with the other banking majors.
