The December quarter national accounts from the Australian Bureau of Statistics (ABS) showed that real per capita household consumption declined by 2.5% in 2023, which was the weakest result outside the pandemic since the Global Financial Crisis in 2008:
The February Household Spending Indicator (HSI) from the ABS revealed that, in nominal terms, household spending grew by 3.6% through the year, which was lower than the combined rates of monthly CPI inflation (3.4%) and population growth (circa 2.5%):
That said, there was a moderate pick-up in the ABS HSI, partly reflecting base effects.
CBA has released its own Household Spending Insights (HSI) for March 2024, which is based on transactions across 7 million CBA bank accounts.
The seasonally adjusted CBA HSI grew by only 0.2% in March to be up 3.4% year-on-year:
At 141.8, CBA’s HSI is lower than the November 2023 peak of 142.6, suggesting a softening of household spending since the last RBA rate hike in November 2023.
Over the year, household spending growth was driven by necessities, namely insurance (10.5%), health (6.5%), utilities (6.2%) and education (5.3%):
In its analysis of the data, CBA noted that “the pace of economic growth is moderating, with the Q4 2023 National Accounts showing annual GDP growth of just 1.5% year-on-year”.
“This slowdown is being led by the consumer, with the HSI showing the slow pace of growth continued into Q1 2024”.
“Importantly, the 3.4% year-on-year increase in the HSI for March is nominal dollars”.
“With the annual rate of inflation in January and February steady at 3.4%, spending is close to flat in real terms and is declining on a real per capita basis”.
“Together with decelerating inflation, soft household spending supports our view that the RBA can start lowering interest rates in September this year”.
The Australian consumer recession drags on, masked only by extreme levels of net overseas migration.
