Australian Household Spending Rises Despite Higher Interest Rates
Australia's household spending posted a strong gain in June as consumers continued to splurge on electric vehicles, despite higher interest rates.
The Australian Bureau of Statistics (ABS) reported that its monthly household spending indicator (MHSI) rose 0.8% in June to A$81.3 billion ($56.92 billion), outpacing analyst expectations of a 0.2% increase.
New vehicle sales, particularly electric vehicles, drove the growth in transport spending, with EV sales accounting for an increasing share of overall new vehicle sales as households adjusted their behavior in response to rising fuel prices.
The Reserve Bank of Australia has raised interest rates three times this year to 4.35% to combat inflation, but consumer demand remains resilient, with the central bank cautious about the potential impact on housing market weakness and the so-called wealth effect.