Tax cuts don't appear to be fuelling shopping sprees, with transaction data suggesting extra take-home pay is going towards staples and paying down debt.
Footy finals were the only bright spot in an otherwise glum September for spending, with recreation recording the only rise in a discretionary category over the month.
Commonwealth Bank's spending indicator, which draws from the de-identified customer transaction data, fell 0.7 per cent in September, following a 1.8 per cent gain in August that was in part buoyed by an early Father's Day.
Consumer surveys confirm ongoing nervousness about the state of personal finances, even as households start to regain confidence in the broader direction of the economy.
ANZ and Roy Morgan's weekly consumer confidence index remains weak but has been trending higher from a prolonged stint below long-run averages.
Sustained financial pressure from high interest rates and inflation has Australians looking for opportunities to save money, including downgrading or dropping health insurance cover.
Private Healthcare Australia chief executive officer Rachel David said memberships and coverage were steadily increasing, yet falling premium revenue suggested policy holders were simultaneously scaling back.
"The fact consumers are cutting back their health cover shows just how deep the cost-of-living crisis is biting," Dr David said in reference to recent data from the Australian Prudential Regulation Authority.
Commonwealth Bank chief economist Stephen Halmarick said households were still under pressure.
"Although we saw a rise in recreation spending associated with the AFL and NRL grand finals, consumer spending overall remains subdued, now growing at just over two per cent for the year," Mr Halmarick said.
Question marks hang over consumption habits, with concerns healthier incomes from tax cuts, which kicked in at the start of the financial year, would be spent - adding to inflationary pressures and keeping upwards pressure on the cash rate.
On the other hand, consumers choosing to save the extra money and pay down debt would have a muted influence on inflation.
Mr Halmarick said tax relief was going toward staples and paying down debt and wasn't being spent on "nice to haves".
"This trend is reflected in the year to September, supporting our view that softer economic data, coupled with a further deceleration in inflation will see the Reserve Bank of Australia cut interest rates in December 2024," he said.
Economic teams at the three other big four banks expect the central bank to stay on hold until early next year.
