Key facts
- Australian household spending indicator rose 0.8% in June to A$81.3 billion.
- The annual pace of spending growth increased to 6% in June.
- New vehicle sales, especially electric vehicles, significantly contributed to transport spending.
- Spending on air travel and recreation/culture also saw notable increases.
- The Reserve Bank of Australia has raised interest rates to 4.35% to combat inflation.
Australian household spending showed robust growth for the second consecutive month in June, driven by increased consumer expenditure on electric vehicles and a rebound in air travel, according to data from the Australian Bureau of Statistics. The monthly household spending indicator (MHSI) rose 0.8% to A$81.3 billion, surpassing analyst expectations. The annual growth rate for spending accelerated to 6%, reaching a three-month high. New vehicle sales, particularly electric vehicles, were a significant driver of the 3.0% increase in transport spending, as consumers adjusted to high fuel prices. Spending on recreation and culture also increased by 1.4%. Meanwhile, the Reserve Bank of Australia has implemented three interest rate hikes this year, bringing the rate to 4.35% to combat inflation, with further tightening possible due to rising energy prices. Higher interest rates are cooling the housing market, impacting prices and sales, which could curb consumer spending through the wealth effect.