However, it is hoped that Tuesday’s (6 September) fifth rate rise will have a bigger impact on cooling the economy.
In July household spending rose 18.4 per cent, compared to the same time last year, according to figures released by the Australian Bureau of Statistics (ABS).
Jacqui Vitas, head of macro-economic statistics at the ABS, said July saw the 17th consecutive month of through-the-year increases in total household spending, with increases in all spending categories.
“There were particularly strong increases in spending on clothing and footwear (up 45.0 per cent), transport (up 35.4 per cent) and hotels, cafes and restaurants (up 34.9 per cent),” she said.
“These increases were coming off the back of the COVID-19 Delta lockdown impacts that we saw last year, when there was reduced spending in these spending categories due to lockdowns.”
In contrast, spending categories not so impacted by lockdowns, such as food (up 2 per cent), alcoholic beverages and tobacco (up 1.2 per cent) and furnishings and household equipment (up 0.8 per cent) saw only moderate rises.
Compared to pre-pandemic July 2019 estimates, total household spending was 11.9 per cent higher in current price, calendar-adjusted terms.
The strongest increases over this period were in furnishings and household equipment (up 22.4 per cent), clothing and footwear (up 22.3 per cent) and recreation and culture (up 21.6 per cent).
All states and territories saw increases in household spending in July 2022, compared to July 2021, with NSW (up 33.2 per cent) and South Australia (up 23.3 per cent) recording the highest increases in spending through the year. Both states experienced lockdowns due to the delta wave this time last year.
Compared to pre-pandemic July 2019 estimates, all states showed rises in household spending with Queensland (up 19.1 per cent), South Australia (up 16.9 per cent) and Tasmania (up 16.4 per cent) showing the strongest rises.
At the same time, consumer confidence increased 1.3 per cent last week, reaching its highest level since early June. Across the major states confidence increased in Victoria, Queensland, South Australia and Western Australia, but was flat in NSW.
In the subindices, “Weekly inflation expectations” rose 0.1ppt to 5.4 per cent, though its four-week moving average was down 0.1ppt to 5.5 per cent.
Four of the five confidence subindices increased. “Current financial conditions” rose 1.5 per cent. “Future financial conditions” fell for a second week in a row by 0.5 per cent, however it remains above the neutral level of 100.
Both “current” and “future economic conditions” increased for a fourth straight week, by 1.1 per cent and 2.6 per cent respectively. They’re both at their highest level since late May.
“Time to buy a major household item” rose 2.4 per cent after a 5.5 per cent drop the week before.
“Consumer confidence rose 1.3 per cent last week, to its highest level since June despite a widely expected interest rate increase by the RBA,” ANZ head of Australian economics David Plank said.
“Household inflation expectations rose 0.1ppt over the week to 5.4 per cent.
“The confidence data by housing status shows that for people renting a home, confidence jumped last week and is now at a higher level than it was before the RBA started raising interest rates. However, for people paying off a mortgage and for those who own their home confidence is sharply lower by 19 per cent and 13 per cent respectively since the RBA’s first rate hike in May. The recovery in consumer confidence is encouraging, but it remains in very negative territory despite the lowest unemployment rate in decades.”
