Threats of interest rate hikes are making Aussies fearful of spending, with over half saying they’d use a surprise gift card on groceries or bills.

New research from Finder showed only one in five would use a suprise $500 windfall for discretionary purchases like nice dinners, new clothes or travel.

The data is a bad sign ahead of an anticiapted interest rate hike next month as many mortgage holders prepare to cut spending even further just to get by.

Taylor Blackburn is a personal finance specialist at Finder and said many Australians have shifted their priorities towards financial security.

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Taylor Blackburn is a personal finance specialist at Finder and said Australians are priotiising financial security over discretionary spending. Picture: Supplied

“A $500 reward isn’t being seen as spending money – it’s being seen as breathing room,” Mr Blackburn said.

“When more than half of Australians would immediately put a windfall towards household bills, it’s clear that cost-of-living pressures are still shaping financial decisions,” he said.

Many Aussies are worried an unexpected cost could derail their finances with 20 per cent of those surveyed saying they would put the suprise money towards emergency funds.

Senior portfolio manager Cameron McCormack for investment company VanEck, said a rate increase could happen next month if inflationary pressures like rising oil prices continue to grow.

“We believe there is at least one more rate hike coming this year, and a considerable chance that we will see two hikes,” Mr McCormack said.

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Michele Bullock is the RBA governor and will hand down a rates decision mid next month. Picture: NewsWire / Monique Harmer

The RBA looks at unemployment data when deciding if an interest rate hike will decrease spending and inflation or go too far by pushing too many people out of the labour market.

“Unemployment holding at 4.4 per cent for a second consecutive month confirms the jobs market remains tight and firms the prospect of one more rate hike this year,” Mr McCormack said.

“With the economy close to full employment, the RBA has greater freedom to focus squarely on inflation without a cooling in the labour market,” he said.

The RBA will hand down their next interest rate decision on the 11th of August.

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