An unexpected fall in spending has given the RBA more reason to pause next week, as consumers cut back on purchases amid cost of living pressures.
An unexpected fall in spending has given the Reserve Bank more reasons to pause raising interest rates as new data shows consumers abandoned department stores and cut non-essential purchases last month.
Traders entered the week viewing a rate rise as slightly more likely than a pause, but the prospect of an increase diminished after the release of softer-than-expected inflation figures on Wednesday.fell to 6 per cent in the year to June from 7 per cent, giving outgoing RBA governor Philip Lowe confidence the economy remains on track for a soft landing.Though inflation remains high, Dr Lowe is conscious the 12 interest rises since May 2022 are yet to have their full effect on the economy.
There is already evidence this is the case, with the June-quarter CPI confirming disinflation had taken hold across the retail sector. Oxford Economics Australia head of macroeconomic forecasting Sean Langcake said considering this and falling inflation he expected the RBA would keep the cash rate on hold.“The loss of momentum in consumer spending will weigh heavily on upcoming RBA decisions.”
Since the peak in retail spending last November, goods turnover has fallen 7.9 per cent as consumers ease up on purchases such as appliances and electronics.
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