There are early signs that the impact from the COVID-19 Omicron variant on spending could be short-lived after taking a hit in late December and into January.

The Commonwealth Bank household spending intentions index fell 10 per cent to 103.8 in January, with Omicron likely accounting for a meaningful share of this drop.

The index combines an analysis of CBA payments data, loan applications and publicly available search activity on Google Trends.

“It is no surprise that spending intentions fell more than normal in January due to the spread of Omicron, with the biggest declines seen in the retail, entertainment and household services sectors,” CBA chief economist Stephen Halmarick said.

However, the bank’s latest credit and debit card data for the week ending February 4 shows a broad based pick up in spending growth, suggesting consumer spending likely troughed in early January and has been steadily improving since.

“We continue to expect the Australian economy to grow by close to five per cent in 2022,” Mr Halmarick said.

Other surveys due on Tuesday will also show how individuals and businesses are coping with Omicron and the prospect of higher interest rates.

Reserve Bank governor Philip Lowe warned last week that a rise in the cash rate was plausible this year in the face of rising inflation and falling unemployment.

The weekly ANZ-Roy Morgan consumer confidence index — another pointer to future household spending — slumped earlier in the year to post its weakest January result since 1992 due to the high level of virus cases that were being reported at the time due to the highly infectious Omicron.

The index has gradually recovered in recent weeks as daily infections declined, while vaccination rates have grown to be one of the highest in world.

This comes after the Australian Bureau of Statistics reported on Monday retail sales volumes rose a record 8.2 per cent in the December quarter, following the end of Delta-related lockdowns in October and easing of restrictions.

It followed a sharp fall of 4.4 per cent in the September quarter.

Meanwhile, National Australia Bank will on Tuesday release its monthly business survey for January.

In December, business confidence — a guide to future investment and hiring — slumped as Omicron emerged in late in 2021, falling to a level below that seen at the beginning of the Delta strain lockdowns.

Business conditions, however, held relatively steady.

– AAP