Household spending continues to rise on interest-rate cuts. Picture: NewsWire \/ John Appleyard <\/p>\n
Australian households are showing signs they are moving past cost-of-living pressures, but this could have an impact on the Reserve Bank\u2019s next cash-rate move.<\/p>\n
Spending rose 0.1 per cent in August, fresh Australian Bureau of Statistics (ABS) figures show.<\/p>\n
This follows a 0.4 per cent rise in July and 0.5 per cent lift in June.<\/p>\n
Australians in August spent more booking airline travel and accommodation, helping to drive a 0.5 per cent increase in services-related expenses.<\/p>\n
Spending on goods slipped 0.2 per cent over the same period.<\/p>\n
Oxford Economics head of economic research and global trade Harry Murphy Cruise said a jump in household spending would reduce the likelihood of further interest-rate cuts.<\/p>\n
\u201cOn Tuesday, the RBA flagged their concern that household spending was picking up faster than expected,\u201d he said.<\/p>\n
\u201cIf that continues, the extra spending could keep upward pressure on prices and slow the pace of rate cuts.\u201d<\/p>\n
Mr Murphy Cruise conceded the recent lift could be due to discounts offered by retailers and back-to-back public holidays rather than a \u201cgenuine revival in household appetite to spend.\u201d<\/p>\n
\u201cWith today\u2019s data showing the smallest rise since April and continuing a four-month run of diminishing gains, the RBA will take some comfort that the former has played an important role. Still, spending remains 5 per cent higher than a year ago,\u201d he said.<\/p>\n
Mr Murphy Cruise said a combination of interest-rate relief thoughout the year, rising wages and low unemployment had led to the spending boom.<\/p>\n
The small rise in August was the fourth increase in a row, and spending has risen in 10 of the last 12 months, ABS head of business statistics Lauren Binns said.<\/p>\n
Household spending continues to rise on interest rate cuts. Picture: NewsWire \/ John Appleyard <\/p>\n
While the RBA held interest rates after its September meeting on Tuesday, it has cut rates three times in the last nine months. This included further interest-rate relief in August.<\/p>\n
Deloitte Access Economics partner Stephen Smith said prior to Thursday\u2019s data being released that interest-rate cuts had been pivotal to lifting household spending.<\/p>\n
\u201cA single 25 basis point interest-rate cut is worth nearly $1700 a year for the average new borrower,\u201d he said.<\/p>\n
\u201cWe expect real household spending growth to improve from the 1.0 per cent recorded in the 2024-25 financial year to around 2.5 per cent in both 2025-26 and 2026-27, comfortably faster than broader economic growth in those two years.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Household spending continues to rise on interest-rate cuts. Picture: NewsWire \/ John Appleyard Australian households are showing signs…\n","protected":false},"author":2,"featured_media":184388,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,169,42040,99,164,109976,42038,9565],"class_list":["post-184387","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-australian-bureau-of-statistics","tag-australian-households","tag-business","tag-economy","tag-harry-murphy-cruise","tag-household-spending","tag-interest-rate"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/184387","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=184387"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/184387\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/184388"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=184387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=184387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=184387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}