Commonwealth Bank of Australia's (ASX:CBA) Household Spending Insights Index rose 0.5% in May, indicating early signs of consumer recovery as reduced petrol and electricity costs boost spending on discretionary items, although overall growth remains cautious amid economic uncertainty, according to a CBA report on Thursday.

In May, spending rose in motor vehicles, household services, and health by 1.5%, 1.2%, and 1.1%, respectively, while utilities and education fell by 1.1% and 0.5%, the report said.

"The consumer spending rebound is unfolding at a slower rate than we expected, which could be the result of scarring from a loss of real household income post-COVID, and the impact of global uncertainty caused by trade tensions," said CBA Senior Economist, Belinda Allen.

Spending is expected to pick up in the second half, with a potential rate cut by the Reserve Bank of Australia shifting closer to July, depending on inflation and labor market data, Allen added.

Spending rose the most among mortgage holders and renters in May, outpacing homeowners and reflecting the impact of rate expectations and rental trends on household budgets, the report added.