Consumer spending continues upward trend, with utilities and digital services leading the way
Consumer spending in Australia remained stable last month, according to the latest CommBank Household Spending Insights (HSI) Index, though heavy rainfall in Sydney curbed growth in the harbour city.
The index recorded a 0.3% increase in August, building on a 0.7% rise in July and 0.5% gains in both May and June, indicating a trend towards steady household expenditure.
Nine out of 12 spending categories saw growth in August. Utilities led with a 2.9% increase, followed by communications and digital (1%), recreation (0.6%), education (0.6%), and household services (0.5%). There were also modest gains in motor vehicles, health, transport, and hospitality.
Meanwhile, insurance experienced its first monthly decline since January 2024, dropping by 0.1%. Household goods and food and beverage goods also saw slight decreases after strong results earlier in the year.
“We’ve now seen six months of solid growth, reinforcing our view that a consumer recovery is underway after a series of false starts last year and early into 2025,” said Belinda Allen (pictured right), head of Australian economics at CommBank. “The combination of growing incomes, a solid labour market and lower interest rates is helping improve household sentiment as consumers are able to both spend and save again
“Utilities was the top spending category in August, that uptick is largely driven by general volatility in energy bill payments, as well as the timing of energy price rebates. More interesting is the strong increase in spending on communications and digital, which reflects the longer-running, structural shift in consumers favouring spending on experiences rather than goods.
“In particular, August’s spending increase is propelled by the surging popularity of online services like gaming and streaming, as well as the impact of weather. The wettest August in 27 years in Sydney likely had a hand in higher spending on food delivery services and lower spending in cafes during the month.”
The CommBank HSI Index analyses month-to-month spending patterns using anonymised payments data from about seven million CBA customers, representing roughly 30% of all consumer transactions in Australia.
On a year-on-year basis, household spending has risen by 5%. The largest annual increases were in communications and digital (10.6%), utilities (9.4%), recreation (8.3%), and hospitality (7.7%). Transport spending remained lower, down 1.6%, reflecting a decrease in petrol prices.
The economic environment remains favourable for households. The Reserve Bank of Australia has reduced the cash rate three times in 2025, while inflation has moderated and last year’s tax cuts continue to support spending. Recent GDP figures show that the Australian economy is growing faster than expected, driven by stronger consumer activity.
Allen said CommBank expects only one more rate reduction from the Reserve Bank this cycle. “With the broader economy showing signs of resilience and the consumer returning to a more solid footing, we don’t see the need for the RBA to go much further. We continue to expect just one more cut in November, but no change at the RBA’s September meeting.
“As we look to 2026, we expect to see both consumer spending and the broader economy continue to improve back to around the rate of potential economic growth.”
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