After a period of relentless interest rate increases and skyrocketing global fuel prices, Australia’s household spending has dipped – but not nearly as sharply as many economic analysts had warned, new data from the country’s largest lender Commonwealth Bank (CBA) reveals.
CBA’s latest monthly spending tracking shows Australian households cut their overall spending by 1.2% in April compared to March, a decline driven largely by a sharp pullback in fuel expenditure following emergency government intervention. The federal government in early April rolled out a temporary $2.5 billion cut to fuel excise, alongside a GST rebate, to ease the pressure of March’s record-high fuel prices that pushed crude costs from $US60 a barrel at the start of March to over $US100 a barrel by month’s end. Treasury projects crude prices will remain above $US80 ($A110) a barrel through the next financial year, keeping cost pressures alive for motorists.
Belinda Allen, CBA’s head of Australian economics, noted that while broad spending has softened amid rising borrowing costs and geopolitical uncertainty from the Iran conflict, the slowdown has not turned into the dramatic consumer retrenchment many forecasters predicted. “To date, weakness in sentiment due to the conflict in Iran and higher interest rates is not yet translating into a sharp pullback in discretionary spending,” Allen explained. “Petrol price movements continue to have a big impact on the month-to-month swing in household spending, and we expect households to do much of the heavy lifting over coming months in slowing spending and cooling inflation.”
The April spending data captures the impact of the Reserve Bank of Australia’s (RBA) back-to-back rate hikes in February and March, but does not yet reflect the third rate increase implemented in May, which lifted the cash rate to 4.35% following three consecutive cuts in 2025. The overall spending trend aligns with recent remarks from RBA Governor Michele Bullock, who has pushed back on narratives of an imminent consumer collapse, noting that plummeting consumer confidence has not translated to equally sharp spending cuts.
“Confidence has been low for some time but the consumers have been continuing to spend,” Bullock said in March. “So there’s this issue about the relationship between consumer confidence in these surveys and what people actually do. I think the consumer confidence numbers for some time have been reflecting basically concerns about how much things cost.”
Breaking down April’s spending figures, CBA found a split performance across sectors: six of 12 tracked spending categories recorded growth, while the other six contracted. Even after removing the large monthly drop in fuel spending, overall household spending still dipped by a mild 0.2% seasonally adjusted. The hardest-hit category outside transport was recreation spending, which fell 2.6% month-on-month, marking the second-weakest performance of all sectors. On an annual basis, recreation is the only category still recording negative growth.
Allen attributed the recreation decline primarily to cutbacks in travel-related spending, a trend tied to broader economic uncertainty and cost-of-living pressures. “It appears households may be lowering their travel-related consumption in the face of higher costs and uncertainty from the conflict in Iran. This is picked up in the broader recreation category,” she said. “Declines in annual spending growth were recorded in travel-related categories such as online travel bookings, ticketing services, travel agencies, commercial airlines and accommodation.”
These travel and recreation cutbacks were partially offset by continued growth in hospitality spending, which rose 0.2% in April and 6.2% over the 12 months prior, showing persistent consumer demand for in-person dining and leisure services despite broader economic headwinds. The softer-than-expected spending pullback suggests Australian households are adjusting gradually to higher borrowing and energy costs, rather than facing the severe economic contraction many experts predicted just months earlier.