OPINION: It’s getting worse in consumer land – and we’re not a long way from the bottom.
Another day, another retailer revealing sliding earnings. This time it is discounted clothing group BestClearly, interest rate increases are starting to bite. Anything exposed to mortgage holders or low-income families or workers is struggling.&
And there’s more spending cuts to come: the UBS survey found middle-income households expected to sharply reduce spending on things like entertainment, recreation, eating out, takeaway food, international travel and other “fun” categories.Less’ people – have little choice but to rein in spending. Cash buffers built up in the COVID-19 lockdown years are depleted and low-income earners are having to borrow from others or sell belongings to fund daily spending, UBS said.
It’s more grist for the mill at a time when the market’s trying to work out how much further the rate increase cycle has to go, before the RBA takes its foot off the brakes., showed the decision between raising the cash rate to 4.1 per cent or keeping it on hold were “finely balanced”. Still rates went up and the board reiterated that its priority was to return inflation to its target band within a reasonable timeframe.
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