Economy-wide spending is easing from the record pace enjoyed in the latter half of 2014, despite falling petrol prices and interest rates.

In February, spending was down 0.3 per cent, after a rise of 0.8 per cent in January, the Commonwealth Bank’s seasonally adjusted Business Sales Indicator (BSI) showed.

In the 12 months to February, spending growth eased to 5.7 per cent – its slowest pace in two years, and almost half the one year record pace recorded in September.

CommSec chief economist, Craig James, said an easing in spending was to be expected after growing at above average levels in 2014.

“But the outlook is still positive. Lower petrol prices and lower interest rates will boost spending power,” he said.

James expects that domestic tourism and the strong home building sector will help boost spending in the coming months.

“Sales at retailers that are dependent on home building and purchases should remain well supported,” he said.

“Domestic travel has lifted with the lower Aussie dollar and that is helping hotels and motels and other tourism operators.”

James said weak wages growth would be the key factor to weigh on future lifts in sales but it should be offset by further Reserve Bank interest rate cuts and further employment growth.

“Job advertisements have risen for nine straight months, the Aussie dollar is holding near 76 to 78 US cents, petrol prices remain relatively low and interest rates are at generational lows,” he said.

James is forecasting that the RBA will next cut the cash rate at its May board meeting.

The BSI tracks debit and credit card transactions at CBA’s point of sales terminals, which covers spending all across the economy, including businesses and car sales, rather than just retail spending.

AAP