Australians Keep Spending, Defying Expectations Amid Rising Interest Rates

Australians continued to spend in June, defying expectations and beating forecasts. Household spending rose by 0.8%, driven by a surge in new car purchases, including electric vehicles (EVs), and stronger travel demand.

The Reserve Bank of Australia (RBA) has kept interest rates at 4.35% despite the strong consumer spending numbers. The Australian Bureau of Statistics (ABS) reported that household spending reached A$81.3 billion in June, exceeding predictions for a 0.2% increase after May's strong gain.

The data shows that transport is driving economic growth, with new vehicle sales rising by 3.0%. EV sales have been increasing over the year, according to the ABS. However, other categories are not keeping pace, and higher interest rates are cooling the housing market, which could weigh on consumer spending.