Household goods spending, including fashion, dropped 16% month-on-month in December 2023, according to the latest CommBank Household Spending Insights (HSI).
The drop was most notable for furniture and household appliances, with reduced spending recorded in department stores and men’s and women’s fashion.
It was the largest category fall across eight out of 12 retail or services categories, including insurance and education, and drove an overall slump in monthly household spending of 3.9%.
Other category falls were recorded in recreation (6.5%), food and beverage (2.7%) and hospitality (0.8%). These falls were partly offset by increased spending on transport (1%), insurance (0.6%) and health (0.2%).
Commonwealth Bank (CBA) cited a cumulative effect of successive interest rate rises for the overall dip, as well as consumers bringing forward holiday spending to take advantage of Black Friday/Cyber Monday sales.
CBA senior economist Belinda Allen said the fall in December more than offset the gain of 1.6% in November 2023 and continued the pattern of recent years where strong consumer spending in November is followed by weak results for December.
“Household budgets are undoubtedly constrained with rate rises, leading to a weakening of consumer spending,” Allen said.
“Households in all states reduced spending in December, led by declines in Victoria, South Australia and New South Wales.
“With the pace of economic growth in Australia moderating and the full impacts of November’s rate rise yet to flow through to the consumer, we expect a further slowdown in the pace of household spending over the coming months.
“We have also seen inflation moderate which supports our view that the monetary policy tightening cycle has come to an end and that the RBA can join the expected global shift and start to lower interest rates in September this year.”
The annual rate of change in the household goods category was negative 1% per year, and little changed from negative 1.2% per year recorded in November.
The largest increases in spending in household goods were via online marketplaces, discount and variety stores, used and second hand stores, activewear stores, and cosmetic and beauty stores.
CBA is forecasting the RBA will lower the cash rate by 75bp in the second half of 2024, starting in September, and a further 75bp in the first half of 2025.
The CommBank HSI index tracks month-on-month data at a macro level and is based on de-identified payments data from approximately 7 million CBA customers. It comprises roughly 30% per cent of all Australian consumer transactions.