What happened
Australian Bureau of Statistics data showed household spending rose 1.1 per cent in July, nearly four times the 0.3 per cent forecast. The spending surge accompanied CPI data showing trimmed mean inflation at 3.6 per cent per annum and headline CPI at 3.5 per cent, both lingering above the Reserve Bank's 2 to 3 per cent target band.
Why it matters here
Persistent consumer spending despite previous monetary tightening suggests domestic demand remains hotter than central bank projections. If demand fails to moderate, the RBA will be forced to raise the cash rate further, increasing debt service burdens for households and weighing on consumer-discretionary corporate earnings.
What to watch
The ABS monthly CPI indicator release and retail sales figures ahead of the September RBA board meeting.
Source
marketindex.com.au