Discretionary spending softens as transport costs climb
Australian households are reshuffling their spending priorities as rising fuel costs, driven by the escalating Middle East conflict, push petrol prices to their highest levels in years, according to new weekly card spending data published Thursday by the Commonwealth Bank of Australia (CBA).
Retail pump prices have surged to 253 c/L for petrol and 310 c/L for diesel, CBA data show, with transport-related card spending rising sharply as a result. Fuel accounted for roughly two-thirds of all transport spending in 2025.
Belinda Allen, head of Australian economics at Commonwealth Bank, said the effects of the conflict are being felt most immediately at the bowser.
“Higher fuel prices are the most immediate transmission channel from the Middle East conflict to the Australian economy,” Allen said. “We’re seeing that clearly in the data, with transport spending lifting sharply in recent weeks as petrol prices have moved higher.”
Spending holds up, but priorities shift
Despite the surge in fuel costs, CBA’s weekly credit and debit card data to 27 March show overall household spending has remained broadly steady, recovering after a softer patch in February.
However, the composition of that spending has shifted. Food and household goods expenditure has eased in recent weeks, and recreation spending has also fallen – though CBA noted the latter is consistent with typical seasonal patterns.
Allen said households appear to be drawing on savings rather than cutting back sharply.
“Consumers appear to be smoothing their spending from savings at this early stage,” she said. “Softer discretionary spending, combined with still healthy savings buffers, is helping households absorb higher fuel prices without a significant pullback in overall consumption.”
Household incomes have also provided some support. CBA’s weekly salary transaction data “continues to show decent income growth that is flowing through to CBA bank accounts,” the report noted.
On energy bills, electricity and gas spending remained solid in early 2026, though CBA attributed this largely to the expiry of federal and state energy subsidies rather than any direct spillover from global energy markets.
Inflation expectations on the rise
The fuel price shock is beginning to filter through to inflation expectations – a development CBA flagged as a key concern for the Reserve Bank of Australia (RBA).
High-frequency market measures, including inflation swaps and breakeven rates, have risen. Consumer inflation expectations have also moved higher alongside petrol prices.
“The Reserve Bank of Australia will be watching inflation expectations closely,” Allen said, adding that while some near-term measures have lifted, longer-term expectations remain largely stable.
Housing market shows early signs of cooling
Beyond household budgets, CBA’s report also flagged early indications of a softening in the Australian housing market.
Daily home price data show price growth is slowing. Prices continue to rise in Perth, Brisbane, and Adelaide, but are easing in Sydney and Melbourne. Auction clearance rates have declined and are tracking below levels recorded in both 2024 and 2025.
CBA said higher interest rates, weaker consumer confidence, slower population growth, and broader global uncertainty are all expected to weigh on housing activity throughout 2026.
