The Visa Spending Momentum Index (SMI) for Australia has increased by 2.7 points in March to reach 98.6, signalling a rebound in consumer spending after two months of decline.
The March SMI data reflects the end of subdued consumer activity that followed a strong December result, suggesting that Australian consumer sentiment may be stabilising.
The index is based on VisaNet transaction data and measures the year-on-year change in household spending, filtering out fluctuations that could obscure broader economic trends.
Among the states and territories, the Australian Capital Territory recorded the highest level of spending momentum with a reading of 100.6. While the rest of the country's regions remained below the benchmark value of 100—indicating that the average cardholder spent less compared to the previous year—their performances in the first quarter of 2025 matched or exceeded early-2024 figures.
Queensland experienced a particularly notable improvement, with its spending momentum increasing by 1.6 points during March, following the disruption from ex-Tropical Cyclone Alfred.
All four segments tracked by the SMI saw increased activity during the month. Discretionary spending categories—including airlines, retail, entertainment, and travel agencies—led the recovery with a reading of 101.6, up 2.1 points from February to March 2025. The other segments—non-discretionary, fuel, and restaurant—also posted marginal gains during the month, though all three remained below the 100 threshold.
Simon Baptist, Principal Economist for APAC at Visa, said the SMI results reflected a shift in Australians' spending behaviour as inflation moderated. "Last year, the majority of Australians reduced their spending after suffering an extended period where inflation outpaced wage growth. However, spending power finally began to increase as inflation came down at the end of 2024 – translating to increased consumer confidence and an uptick in spending as observed in this month's Spending Momentum Index," Baptist said.
Discretionary spending appeared resilient to broader economic and geopolitical challenges, maintaining its momentum in March. In Victoria, restaurant spending approached year-on-year stability, notwithstanding localised weakness in Gippsland and the South West. Travel-related spending also remained strong, with outbound expenditures helping to support the SMI. According to VisaNet data, Australians accounted for nearly 30 per cent of all international tourists to Japan's ski resorts during the last ski season.
South Australia and Tasmania both experienced the largest increases in discretionary segment readings. Residents in these states increased their spending on non-essentials, suggesting a rise in demand for hospitality and travel-related activities. These trends point to a continued preference among Australians for lifestyle experiences, particularly travel. Baptist commented on this behaviour, stating,
"Aussies are continuing to prioritise travel even as they cut back on other things. While this month's SMI shows a slight spending uptick, sentiment remains fragile. Generally speaking, Australian households are asset-heavy, so corrections in stock markets are likely to have significant impact."
Non-discretionary expenditure categories—which include medical and health services, pharmacy, food retail, supermarkets, utilities, and education—recorded a slight improvement, with the segment rising by 0.1 points from February to March 2025. Fuel spending exhibited a similar increase of 0.1 points. Despite these modest improvements, both segments stayed below the 100 mark, indicating continuing caution among households when it comes to essential spending.
The March SMI result marks the first increase so far in 2025 and suggests a tentative renewal of consumer confidence. The movement has been supported by stabilising inflation rates, steady wage growth, and solid activity in discretionary areas including dining and travel.
The Visa SMI aggregates national and regional transaction data, applying proprietary methodologies to adjust for changes in card portfolios, payment routing, and merchant acceptance, which enables it to isolate underlying trends in consumer behaviour. The index is population-weighted to ensure accuracy and comparability across regions.
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