CBA cautions Australian spending surge may fade as rates climb

Australian households started 2026 on a robust footing, buoyed by summer season occasions and a resilient jobs market, however rising borrowing prices are anticipated to sluggish shopper momentum because the 12 months progresses, the Commonwealth Financial institution of Australia has warned.

The financial institution’s newest Family Spending Insights (HSI) Index confirmed consumption rose 0.5 per cent in January, extending the run of month-to-month beneficial properties to 16 consecutive months. Annual spending development stood at 5.6 per cent, easing barely after a sturdy finish to 2025.

Recreation was among the many strongest-performing classes, climbing 1 per cent in January and seven.6 per cent over the 12 months. Main summer season sights, together with the Australian Open, together with music festivals and vacation journey, drove greater spending on ticketing companies, tourism operators and journey companies.

“We’ve now seen constant month-to-month spending development for effectively over a 12 months, which factors to regular underlying demand throughout the financial system,” mentioned Ashwin Clarke, Senior Economist at CBA.

Nonetheless, Clarke cautioned that the backdrop is turning into more difficult.

“Whereas shoppers have continued to spend, greater rates of interest and easing revenue development are prone to sluggish that momentum because the 12 months progresses,” he mentioned.

Utilities payments soar as rebates wind again

Important prices additionally performed a major function in January’s spending enhance.

Utilities recorded the biggest month-to-month acquire, rising 3.7 per cent after one other sturdy carry in December. Over the previous 12 months, utilities spending has surged 15.6 per cent, largely reflecting greater electrical energy and fuel payments as federal power rebates had been scaled again.

Wage development regular, however pressures persist

CBA knowledge confirmed quarterly wage development held at 0.8 per cent in January, with annual development at 3.1 per cent. Whereas wage outcomes have stabilised, weak productiveness development continues so as to add to labour value pressures for companies, preserving inflation dangers in focus.

The January spending knowledge predates the most recent charge enhance by the Reserve Financial institution of Australia, and markets are pricing in the opportunity of additional tightening if inflation proves persistent.

Mortgage holders have led spending development over the previous 12 months, however they continue to be essentially the most uncovered to greater repayments as rates of interest rise. Renters and outright residence homeowners have recorded extra average beneficial properties.