‘Overall level of caution’: Household spending | Australian Markets

An prolonged vacation period on the back of Easter and Anzac Day falling in consecutive weeks helped raise client spending in April however not by as a lot as consultants anticipated on the back of falling rates of interest.

In a great addition for retailers, the Commonwealth Bank Household Spending Insights Index rose by 0.2 per cent in April, on the back of a weak March quarter, pushed by a raise in hospitality, recreation, family items and food beverage.

But even with the raise, Commonwealth Bank senior economist Belinda Allen instructed NewsWire that spending within the month remained a “mixed bag” and was “underwhelming”.

“I think it’s going to take time for the interest rate cuts to really see consumers boost spending further,” she stated.

Australians’ client confidence remained low, Ms Allen stated, resulting in much less financial exercise.

“Households are continuing to save at a higher level than you would expect given the improvements in inflation, the income tax cuts and lower interest rates,” she stated.

“I think it’s pretty evident there’s still a bit of caution out there and certainly a lot of the global news wouldn’t help either.”

Ms Allen stated it may take a number of charge cuts for sentiment to improve, citing the spending information as another excuse to slash the official money charge on May 20.

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“We do think it will take further interest rate cuts to see a further lift in momentum in consumer spending this year,” she stated.

Ms Allen additionally pointed to Wednesday’s wage price index, which confirmed wages have been up 3.4 per cent in contrast with headline inflation at 2.4 per cent, as a motive for households spending more within the month of April.

“It really comes down to sentiment,” she stated.

“Even though we’ve still got a relatively tight labour market, inflation is coming down. It does look like households are still particularly cautious.

“If you look at sentiment surveys that also came out on Wednesday, [Australians] are still more pessimistic than optimistic and that is being reflected in consumer decisions around how much they will spend and what they will spend it on.”

Treasurer Jim Chalmers and new Employment Minister Amanda Rishworth welcomed the rise in wages, saying annual actual wages had grown for 18 months in a row “under the Albanese Labor government”.

“Under Labor, more Australians are working, earning more and keeping more of what they earn,” they stated in a assertion.

“We’re really pleased with today’s figures which show annual real wages have now grown for six quarters in a row after going badly backwards under the previous Liberal government and falling for the five quarters in the lead-up to the 2022 election.

The Commonwealth Bank said April should have been a strong month for spending, as it featured the Easter‑Anzac Day “super holiday”, the lead-up to the federal election and a post‑Cyclone Alfred rebound, though it was marred by US President Donald Trump’s tariff bulletins.

Comparing March and April 2025 with final 12 months to take away the Easter affect, annual growth remains to be 5 per cent stronger.

The largest rise in client spending was insurance coverage, up 1.6 per cent, adopted by hospitality, up 1.4 per cent, communications digital, which grew 0.7 per cent, health, which jumped 0.4 per cent, and family items and food beverage, each up 0.1 per cent.

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In good news for households’ budgets, the most important falls have been in utilities, down 2 per cent, whereas electrical energy and gasoline prices additionally fell on the back of authorities subsidies.

According to the Commonwealth Bank, the most important cohort of households lifting spending was renters, with older Aussies who own their home outright accounting for the smallest uplift in spending.

“Generally, when we think about it, renters are younger, so they’re the ones that are going to be out more in April, given we had kind of that public holiday effect of Easter through to Anzac Day,” Ms Allen stated.

“I think the renter story was very much an age group story in particular categories and that may well retreat in the next month.

“In contrast, it’s probably why owners outright fell as well, as they are less likely to be out at the pub on Anzac Day compared to renters.”