The monthly CommBank Household Spending Insights (HSI) Index fell 1% in October, led by declines in spending across recreation, hospitality and food and beverage, as interest rate rises continue to be felt on consumer spending.

Spending on essential goods and services was up 0.3%, while spending on discretionary was down 3.7%.

CBA chief economist, Stephen Halmarick said, “October’s CommBank HSI Index demonstrates a clear tightening in consumer spending compared to September’s result, which was buoyed by a number of one-off events like the FIFA Women’s World Cup. We are clearly seeing the flow on effects of the interest rate increases from earlier in the year. 

“Last week’s decision from the RBA to raise the case rate by a further 25 basis points, to 4.35%, is likely to add further downward pressure to household spending over coming months. However, November will be an interesting one to watch with potential increases in spending due to sales events.

“Looking ahead, our base case is no further increases in the RBA cash rate, although there remains upside risk based on inflation figures due at the end of January.”

The CommBank HSI index tracks month on month data at a macro level based on de-identified payments data from approximately seven million CBA customers, comprising roughly 30% of all Australian consumer transactions.

October HSI data was refined to more accurately capture household spending, removing some categories that relate to investments and incorporating Buy Now Pay Later data, to provide a more complete picture of household spending.