The CommBank Household Spending Intentions Index rose by 2.5% to 115.0 in December, its highest level since the series commenced in July 2017, with the biggest gains in the travel, transport and retail sectors.
The Index shows strong Christmas trading was boosted by the lifting of Delta restrictions, with accumulated household savings also powering the surge.
Retail spending intentions rose 10.8% in December and are 2.8% higher than December 2020, driven by increases in spending on speciality retail stores, department stores, clothing stores, electronic stores, jewellery and watch stores, as well as hardware stores.
Travel spending intentions rose 28.1% during December as a result of the reopening of state borders and an upswing in summer holiday spend. While travel related spending is up 20.9% from December 2020, it remains lower than December 2019.
Transport spending intentions jumped 11.8% in the month, with higher petrol prices a key factor as spending at service stations continued to lift, along with spending on taxi services, tolls, car washes and trailer rentals. That said, transport spending intentions are still below pre-COVID levels, with public transport spending still weak.
CBA senior economist Belinda Allen said the household spending data for December showed a sustained recovery from the Delta lockdowns, although increased numbers of people isolating due to the Omicron virus has been impacting spending levels in January.
“December is generally a seasonally strong time for retail due to Christmas shopping. However, this was compounded by the fact that this year was the end of restrictions post Delta and there was accumulated household savings, which led to a strong surge in spending,” she said.
“The boost in the travel and transport sectors also reflect increased mobility around the country in December. Domestic tourism is lifting spend, while we continue to see reduced air travel due to availability. This is flowing through to higher spending in other related sectors.
“The Omicron variant is an important development to watch. It is impacting the demand and supply side of the Australian economy. We can see from our high frequency credit and debit card data there does appear to be a fall in spending in January, with spending on services more impacted than goods spending.”