A boost in home-buying spending intentions and increased spending on transport post lockdown are behind an increase in the CommBank Household Spending Intentions (HSI) index.
The Index rose 1.8 per cent to 107.3 in February, with home-buying spending intentions climbing 29.6 per cent in February, while transport spending intentions rose 11 per cent.
While home-buying spending intentions rose last month, it was still down 4.4 per cent on February 2021, when home-buying was at its peak.
On the back of the renovation boom, there was a 4.1 per cent pick-up in household services spending during February, as well as the use of services such as childcare and personal care.
Transport spending intentions rose 11 per cent in the month thanks to higher fuel costs with spending on taxis, parking lots, car washes, freight and trucking services also higher.
Travel spending was 6.9 per cent lower than in January as people returned from holidays, but was 40.5 per cent higher than February last year.
CBA Chief Economist Stephen Halmarick said the rise in the CommBank HSI Index in February showed Australians were back on the move following the end of Covid restrictions.
“Following the usual seasonal softness in January and effects of the Omicron variant, it was good to see spending intentions bounce higher in February,” Mr Halmarick said.
“Increased spending intentions in home buying, transport and household services supports our view that as Australians get back out-and-about the economic outlook for 2022 is for a year of solid growth.”
While the Ukraine-Russia conflict had gathered a lot of headlines recently, Mr Halmarick said it wouldn’t impact the economy in the short-term.
“Although we don’t expect significant impacts for the Australian economy from the Ukraine situation, we see three main implications: market sentiment and a ‘flight to quality’; higher energy prices and inflation; and reduced global growth,” he said.
“Given surging inflation as well as strong employment and wages growth data, we maintain our view that the Reserve Bank of Australia will need to raise interest rates earlier than many expect, with an initial increase to 0.25 per cent in June this year, rising to a peak of 1.25 per cent in early 2023.”