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Australian households continued their economic cutback in February despite a certain pop megastar driving a huge increase in spending at music festivals and event venues.
According to the latest data from Commonwealth Bank's Household Spending Insights (HSI) index, household spending fell 0.3 per cent last month.
That was despite music festivals and function and event centres registering jumps of 76 and 115 per cent respectively, thanks largely to hundreds of thousands of people flocking to and spending heavily at Taylor Swift's seven concerts in Melbourne and Sydney.
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"February was a big month for concerts and big social events in Australia," CBA chief economist Stephen Halmarick said.
"Consumers clearly prioritised tickets to see their favourite artists like Taylor Swift, with spending up on musical festivals, as well as spending on flights and hospitality venues, likely associated with the headline concerts.
"However, the jump in hospitality and recreation spending wasn't enough to offset weakness across seven of the 12 categories of the Index, which paints a picture of consumers cutting back."
Of those large categories, the falls were greatest in household goods (-1.9 per cent) and transport (-1.6 per cent).
While the HSI index rose 3.5 per cent in the last 12 months, Halmarick said that essentially meant spending stayed steady over the course of the year.
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He isn't expecting it to start moving upwards anytime soon, and said that would justify the Reserve Bank beginning to cut interest rates in six months' time.
"It's important to note the annual rate of increase of the HSI index has fallen to 3.5 per cent, which is close to flat in real terms when an inflation rate of 3.5 to 4 per cent is taken into account," Halmarick said.
"We expect to see continued softening of household spending in the near term as the November 2023 interest rate hike takes hold, which together with decelerating inflation supports our view that the RBA can commence official interest rate cuts in September this year."
The HSI index is based on spending data from around 7 million Commonwealth Bank customers, which it says makes up about 30 per cent of all consumer transactions in Australia.
