Petrol prices fuelling downturn in household spending

HIGHER petrol bills are masking signs Australians are starting to pull back on spending elsewhere, new Commonwealth Bank data shows.

Household spending growth remained resilient into early November and has been broadly steady since the middle of 2026, Commonwealth Bank senior economist Ashwin Clarke said.

“However, some of this resilience has been higher spending on fuel."

§ Petrol takes a bigger share of household spending

Strip fuel out and the latest data points to some slowing in spending, with households facing the combined pressure of higher interest rates, cost of living and petrol prices..

Petrol station expenses have taken a bigger share of total household spending than at the same time last year, the data shows.

“Petrol spending as a share of wallet has continued to be elevated, likely weighing on households’ ability to spend on other goods and services,” Clarke said.

The impact has been uneven across the country.

Regional areas in Victoria, South Australia and Tasmania have recorded some of the biggest increases in petrol spending as a share of the total compared with last year.

The ACT has been least affected, which Clarke said was likely linked to its rapid uptake of electric vehicles.

§ Moving house and retail spending lose share

Some of the clearest signs of households cutting back are in spending linked to moving house.

Home improvement and maintenance, along with storage and removalist fees, has been running below 2025 levels as a share of total spending in recent months.

Retail spending has also slipped slightly below last year’s share of spending, although the picture varies between categories.

Electronics spending has been relatively solid, while clothing and accessories have been weaker.

A pick-up in retail spending in the latest week of the data may also point to early Black Friday sales activity.

Spending on events, recreation and eating and drinking out has maintained or increased its share of spending compared with last year.

Clarke said the pattern was consistent with consumers “generally prioritising experiences despite multiple headwinds”.

§ Black Friday to test household spending resilience

Some of the recent weakness may prove temporary.

Spending can be volatile through the December quarter as households hold back before major sales periods and then spend more heavily during events such as Black Friday and Boxing Day.

Recent CommBank IQ research found Australians were spending more online but making smaller individual purchases, suggesting shoppers were becoming more deliberate about where their money goes ahead of the sales.

“Some of the weakness in non-fuel spending may be households building up a stockpile of savings to unleash at Black Friday sales,” Clarke said. “Next month’s data will be telling.”

Clarke said Black Friday would provide an important test of household spending resilience “in the face of five interest rate hikes, a spike in fuel prices and cost-of-living pressure”.

§ CommBank expects spending slowdown to intensify

CommBank expects the slowdown in spending growth to intensify as those pressures weigh more heavily on household budgets, although exactly when that happens remains uncertain.

“Households may prefer to splurge for the holiday season, before cutting back next year,” Clarke said.