ANZ: Sharp drop in consumer spending suggests RBA rate hikes are working

Australian consumer spending fell 8.0% year-on-year in the week ended Aug. 5, ANZ said.

Weak indicators of household spending and falling retail sales, combined with continued weakness in consumer spending, suggest the RBA‘s efforts to rein in spending are working.

Households facing tight cash flows are adjusting by reining in spending.

The RBA expects home loans to hit a record 9.8 per cent of household disposable income by the end of the year, in line with ANZ’s view that the RBA has shifted to a wait-and-see stance and won‘t raise rates further.