Fresh figures from the Australian Bureau of Statistics on Tuesday show August household spending was basically unchanged from July, short of the 0.4% increase economists projected. Compared with a year earlier, spending rose 6.8%, undershooting the 7.1% forecast. Tom Lay, the ABS's head of business statistics, said recreation and culture led the pullback "after months of higher spending associated with major sporting events," partially offset by more money going to transport. He also pointed to a clear rise in electric-vehicle purchases, with households reacting to higher fuel prices.
The Australian dollar barely budged after the release, trading just above 70 US cents. Policy sensitive three year government bond yields stayed lower after earlier declines. Under Governor Michele Bullock, the Reserve Bank of Australia raised interest rates in each of the year's first three meetings, then kept them unchanged at the two that followed. Another increase to 4.6% is anticipated this afternoon, which would mark a fourth hike as it seeks to cool demand and rein in inflation.
Beyond spending, other signals point to a cooler patch. The housing market, which links into many parts of the economy, has been sliding for multiple months. The last two reports showed unemployment increasing, reaching 4.6%. Bullock has indicated the unemployment rate may need to drift toward 5% to relieve price pressures.
When household spending shifts, it is wise to revisit how you protect and grow savings. Join Briefs Finance CEO Jaspreet Singh on September 29th for a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, where he shows how we're spotting investment opportunities as the dollar falls. Save your spot.
Flat spending, a weakening housing backdrop, and a higher jobless rate are the kind of demand coolers the RBA has been targeting. For everyday budgets, watch how transport costs evolve and note the shift toward electric vehicles alongside rising fuel prices. With a policy decision due this afternoon, rate sensitive corners of your finances could see momentum change quickly.
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