The flat print gives markets a small reason to question how much further the RBA needs to go, not whether it hikes today, so any reaction is more likely in November pricing and statement tone. Softer domestic demand sits awkwardly with the RBA’s inflation worries but fits the argument that the tightening cycle is nearing its end. Higher fuel costs tied to the Iran war inflate some categories in nominal terms, which keeps oil a swing factor for both spending and inflation.
—
Earlier:
- Sticky core inflation pushes RBA towards its highest cash rate since 2011
- RBA preview: A 25 bps rate hike is priced in, but what comes after that?
- All four major Australian banks now forecast RBA hike to 4.60% on September 29
- RBA governor Bullock flags inflation risks as higher neutral rates come into focus
- RBA’s Bullock says supply shocks hard for policy to manage, flags second round risk
- RBA’s Hunter says rates may need to rise again as inflation risks stay tilted higher
—
Summary
- Australian household spending was flat in August (0.0% m/m), against a 0.4% forecast and a 1.1% rise in July.
- Annual growth eased to 6.8% from 7.0%.
- Only three of nine categories rose: transport (+2.3%), hotels, cafes and restaurants (+0.8%) and miscellaneous (+0.3%). Recreation and culture fell 1.4%, and clothing and footwear and alcohol and tobacco each fell 1.0%.
- Goods spending rose 0.3% and services fell 0.3%. Discretionary spending slipped 0.3%, while non-discretionary spending rose 0.6%.
- NSW and Queensland rose 0.3%, while the ACT, Tasmania, Victoria and Western Australia all fell.
- The figures are in current prices, not adjusted for inflation. They landed hours before the RBA is widely expected to lift the cash rate to 4.60%.
Australian household spending was flat in August, missing the 0.4% rise economists expected, according to the Australian Bureau of Statistics. The result follows a 1.1% jump in July. Annual growth slowed to 6.8% from 7.0%.
The detail was mixed. Only three of nine categories rose: transport gained 2.3%, hotels, cafes and restaurants rose 0.8%, and miscellaneous spending added 0.3%. The biggest falls were in recreation and culture, down 1.4%, and in clothing and footwear and alcohol and tobacco, each down 1.0%.
Goods spending rose 0.3%, helped by motoring goods and vehicle purchases, while services fell 0.3% on weaker recreation and cultural services, health services and personal care. Discretionary spending slipped 0.3%, while non-discretionary spending rose 0.6%, led by motoring goods and rail and road transport.
By state, New South Wales and Queensland each rose 0.3%, with South Australia and the Northern Territory up 0.1%. The ACT and Tasmania fell 0.5%, Victoria dropped 0.4% and Western Australia slipped 0.2%.
The ABS figures are in current prices and are not adjusted for inflation, so higher prices for fuel and other goods inflate the headline. The indicator draws on bank card transactions, supermarket data and new vehicle sales, benchmarked to national accounts household consumption.
The timing matters. The Reserve Bank of Australia announces its decision at 2:30pm AEST, with Governor Michele Bullock’s press conference at 3:30pm. A hike to 4.60%, the fourth of 2026 and the highest cash rate since November 2011, is widely expected. In a Reuters poll, 33 of 34 economists forecast an increase, as have all four major banks.
One flat month in a noisy series is unlikely to change today’s call. Any read-through is more likely to show up in how the market prices November and in the tone of the RBA statement. NAB has argued the RBA could finish hiking and cut before its G10 peers, while CBA has said a September-quarter trimmed mean inflation reading of 1% or more could bring a November hike.
Traders will watch the RBA statement and press conference for signals on what comes next, followed by September-quarter inflation and retail sales data.
This article was written by Eamonn Sheridan at investinglive.com.