ANZ’s observed spending data to the week ended 18 March shows that households are cutting back hard following ten consecutive interest rate hikes by the RBA:
Overall spending is down 7.5% year-on-year, with groceries the only area that is experiencing growth.
As expected, discretionary spending has been cut the hardest as households make room for the circa 50% increase in mortgage repayments since April 2022.
The results follow the collapse in the “Time to buy a major household item” sub-component reported in the latest ANZ-Roy Morgan consumer confidence survey:
Household consumption is the economy’s biggest growth driver, accounting for more than half of final demand in a typical quarter:
Where household consumption goes, the economy typically follows.
The RBA would be crazy to continue hiking interest rates.
