As I keep saying, the household spending recovery is largely a mirage.
The CommBank Household Spending Insights (HSI) Index increased by 0.6% in October, mirroring September’s increase and representing the thirteenth consecutive month of growth for Australian households.
11 out of 12 categories saw an increase in spending, with Transport (+1.2%), Motor Vehicle (1.0%), and Hospitality (+1.0%) leading the way. Australians continued to spend money on auto maintenance, filling up their vehicles, dining out, and placing takeout and delivery orders.
Belinda Allen, Head of Australian Economics at CBA, stated that price hikes rather than just increasing consumption volumes are probably contributing to the recent uptick in spending.
“That’s significant because it complicates our understanding of household resilience and the Reserve Bank of Australia’s assessment of the economy when making future interest rate decisions.”
The industries with the biggest yearly increases—utilities (+13.8%), communications and digital (+10.1%), and hospitality (9.1%)—are also among those most impacted by inflation and the reduction of government assistance for energy expenses.
Only in Australia would you get a huge energy shock that didn’t need to happen, misrepresented as a consumer-led recovery.
So much so that the lie was believed and promulgated by the central bank.
Here’s your spending recovery.
Here is the ABS Household Spending Indicator with volumes versus value.
With utility bills up 70% over the year, the aggregate value lift in the HSI is about two-thirds energy bill shock. Adjust that for immigration, and it is barely zero growth per capita.
Adjusting the volume growth for immigration gives us roughly a 1.2% per capita gain.
This is with pent-up demand after rate cuts.
I hope you’re enjoying your ‘economic recovery.’
