Canberra, The Commonwealth Bank of Australia (CBA) on Tuesday released data showing that residents are beginning to pull back on their spending amid rising inflation and interest rates.
The CommBank Household Spending Intentions (HSI) Index, which measures consumer sentiment based on card spending data and publicly available loan application and search trends, showed a drop of 3.8 per cent in April after reaching a record high in March, reports Xinhua news agency.
Australians were shown to be spending less on homes, health and fitness, and transport spending, but were spending more on travel entertainment and retail.
Commonwealth Bank of Australia senior economist, Belinda Allen, said despite the drop, the 2022 April index was still an improvement from April of 2021.
"With an interest rate hiking cycle now underway the Australian economy is in a strong position."
"We are seeing a post Covid normalisation of consumer spending patterns, with lower spending on categories that increased during lockdowns," said Allen.
In the last several weeks Australia's central bank, the Reserve Bank of Australia (RBA), has been forced to lift interest rates for the first time in over a decade in response to headline inflation soaring past 5 per cent.
The CBA immediately lifted their interest rates for customers following the RBA's 0.25 percentage points increase on the cash rate last week.
Allen said the bank expects the cash rate to continue to be lifted through to February 2023, bringing the cash rate to 1.60 per cent.