Retailers across Australia and New Zealand are competing with petrol stations when it comes to securing a slice in household budgets, with data showing petrol prices inflating March spending.
The latest CommBank Household Spending Insights (HSI) index rose 2.9 per cent in March compared to February 2026. This followed a 0.4 per cent fall in February.
The lift was predominantly driven by a 23 per cent lift in transport costs, likely driven by rising fuel prices.
Even excluding transport costs inflated by higher fuel prices, household spending was still up 1.0 per cent, with all 12 categories recording monthly increases.
“As expected, the sharp March lift in household spending reflects higher petrol prices as a result of the conflict in the Middle East,” CBA head of Australian economics Belinda Allen said.
“Of the 2.9 per cent lift in the month, over half was contributed from transport alone. Spending at petrol stations accounts for well over half of the category, with spending up around 45 per cent in the month.
“Looking ahead, CommBank expects household spending to slow as real household disposable income growth weakens, helping ease inflation pressures over time. The outlook for consumers will be critical to the path of interest rates beyond May.”
The same issue is being reported in New Zealand. Worldline NZ reported that consumer spending transacted through its payments network in March was slightly higher than a year ago, but added that a combination of the effects of the war in the Middle East and weather made for a tough end to the month for many merchants.
Core retail spending reached NZ$3.97 billion, which is up by around 0.5 per cent compared to March 2025.
Worldline NZ chief sales officer Bruce Proffit confirmed fuel outlets saw a massive surge in spending, lifting by 33 per cent over the month year-on-year.
“Spending growth was up up 2.9 per cent in the first weekend of March (28-Feb to 1-Mar), around the time of the initial attacks on Iran,” he said. “By the last weekend of March (28-29), spending at core retail merchants was barely up 0.1 per cent above year-ago levels.”
Proffit notes that the end-of-month Core Retail spending slowdown was likely the result of continued growth in spending at Food and Liquor stores but less spending at Hospitality and other Core Retail merchants – patterns that he said are consistent with tight budgets affecting discretionary spending.
Retail NZ CEO Carolyn Young said the 0.5 per cent headline growth is a mirage.
“Our analysis has found that behind that figure, fuel is doing the heavy lifting,” Young said. “If you account for that rise in fuel spend, we estimate core retail spending actually dropped by 1.2 per cent year-on-year. That tells us consumers have aggressively cut back on their spending elsewhere during March.
“Every extra dollar spent on transport is a dollar lost to a local retailer,” Young continued. “After several years of tough trading for retailers, many don’t have the financial reserves to weather another sustained setback.
“When the official Stats NZ figures are released later this week, we expect them to confirm that while the overall number is in the black, the ‘real’ retail economy is seeing a significant downturn in volume.”
Back in Australia, CommBank’s latest HSI report also shows that household spending patterns are diverging sharply by age.
Over the year to March, consumers aged 65-plus recorded the strongest growth, followed by those aged 55 to 64 and 45 to 54. Younger cohorts saw slower spending growth, particularly people aged 25 to 34.
“Typically, households aged 65 and over have higher disposable incomes and are more likely to benefit from higher interest rates compared with other age groups,” Belinda Allen said. Nevertheless, “we did see spending on essential categories continued to drive growth across all age cohorts.”
Compared to March 2025, spending growth lifted across all age groups except those aged 18 to 24, with the biggest acceleration among Australians aged 55 to 64.
In other categories, hospitality spending increased 1.2 per cent and recreation rose 0.9 per cent over the month, supported by a busy events calendar including the start of the NRL and AFL seasons, the Formula 1 Grand Prix and the Women’s Asia Cup.
Utilities spending rose 6.9 per cent, lifted by the end of electricity rebates, while spending on insurance climbed 2.5 per cent, most likely driven by health insurance prepayments made ahead of premium rises from 1 April.
Across the board, annual spending growth lifted to 8.5 per cent in March. Over the quarter, spending rose 1.8 per cent in nominal terms, but with headline inflation estimated at 1.4 per cent, real spending volumes are estimated to have increased by just 0.4 per cent.
HSI data also showed that regional areas across Australia recorded stronger annual spending growth than metro areas across most states, with Queensland the standout in both metro and regional locations.
Western Australia’s regions also performed strongly, while the weakest growth was recorded in the ACT, metro Tasmania and metro Victoria.
While higher fuel prices initially lifted spending, regional areas are more exposed to prolonged increases given the heavy reliance of agricultural, mining and freight industries on diesel-intensive operations. If elevated fuel prices persist, Allen said regional spending is likely to soften.