Household spending softens following Taylor Swift lift

After household spending jumped during February due to Taylor Swift’s sold-out stadium tour, turnover in March was weaker.

Households spending edged higher in March; however, the increase was offset by the dwindling amount devoted to recreation after Taylor Swift’s seven sold-out stadium shows buoyed turnover in February.

Fresh figures released by Commonwealth Bank on Thursday showed household spending rose by just 0.2 per cent in March as shoppers stocked up their fridges for the Easter long weekend and travelled to meet family and friends.

The CBA figures capture payments data from seven million of the bank’s retail customers, equating to 30 per cent of total spending across the country.

Spending rose across 10 of the 12 categories, with gains led by transport, which jumped 4.2 per cent as households shelled out more at the petrol bowser, for rideshare services and in public transport fees.

Consumers splurged prior to Taylor Swift’s sold-out Eras tour. Picture: NCA NewsWire / Richard Dobson

Food and beverage spending also outperformed, rising 4 per cent during March, with supermarkets, liquor and convenience stores as well as butchers and bakers among the major recipients.

CBA chief economist Stephen Halmarick said the earlier-than-usual timing of the Easter long weekend, which had unusually fallen in March alone, had brought forward spending.

“Strength in March is likely to be offset by some softness in April due to the timing of Easter,” he said.

Mr Halmarick added that despite the boost from spending associated with Easter festivities, broader consumer spending trends remained soft.

“The annual rate of increase of the HSI Index is steady at 3.4 per cent, which is close to flat in real terms when an inflation rate of 3.5 per cent to 4 per cent is taken into account,” Mr Halmarick said.

However, following a summer spending splurge, households spending on recreation dived 6.8 per cent in March.

“When big events happen like Taylor Swift and the FIFA Women’s World Cup … it’s not new money going into there, households are just reallocating where they’re spending their recreation money,” Mr Halmarick added.

US Federal Reserve Bank chair Jerome Powell. Hotter-than-expected inflation data in the US released overnight could pose significant risks to the path of rate cuts. Picture: AFP / Justin Sullivan

Spending on household goods also declined over March, falling 1.7 per cent, suggesting family budgets were adjusting to the environment of still-high inflation by prioritising spending elsewhere.

Overnight, fresh inflation data released in the US showed consumer prices in the world’s largest economy were firmer than analysts had expected. Mr Halmarick warned that there were “significant risks” posed to the expected path of US rate cuts by the Federal Reserve.

“Our current forecast is for the first rate cut from the Fed in July, but … there are now significant risks that it’s going to be pushed out beyond that,” Mr Halmarick said.

However, despite the stubborn price pressures in the US, Mr Halmarick affirmed CBA’s view that the Reserve Bank would deliver a rate cut by September.

“Even if the Feds delayed a bit, there’ll be other major central banks that cut rates … It’s a good signal to (the RBA) that globally, inflation is decelerating and central banks are adjusting even if the Fed waits.”

Originally published as Household spending softens following Taylor Swift lift