CBA’s household indicators showed that Australian households are slashing spending, driven by sharper falls in the younger and middle age groups.
This cut in spending comes amid soft wage growth and rising housing-related payments.
“The average CBA household has seen salary and wage payments record a modest gain in Q1 23”, Senior Economist Belinda Allen notes.
“Income from rent and investments rose at a faster pace. Government benefits fell in Q1 23 as did spending after the large spend in the December quarter due to the Black Friday and Christmas period”.
“Over the first quarter, income growth has been strongest for Older Australians and weakest for Boomers”, notes Allen.
“On the spending side, Millennials wound back spending the most, and Older Australians the least”.
“This comes after a period of stronger income and spending in the younger groups”.
Meanwhile, “the share of households accessing hardship arrangements rose slightly in Q1 23”, notes Allen.
“Overall levels are higher than pre-covid but significantly lower than during the pandemic”.
“Rising interest rates and negative real wages growth could see a lift in the coming quarters”.
“Both average loan repayments and average rent payments have risen in recent quarters”.
“The large lift in interest rates over 2022 has meant the lift in average mortgage payments has outpaced average rent payments and this continued over Q1 23”.
“Further gains for both are expected due to the tight rental market and fixed rate mortgage reset”.
