RBA Rate Hike Bets Rise as Household Spending Surges

The Reserve Bank of Australia (RBA) is likely to raise interest rates in September as household spending continues to rise, according to recent data. In July, household spending increased by 1.1% month-on-month on a current price, seasonally adjusted basis, marking its third consecutive monthly increase of 1% or more.

The largest increases were seen in clothing and footwear (up 1.6%), recreation and culture (up 1.5%), and other categories, with all nine spending areas showing growth. Compared to July last year, household spending rose by 7.0%, further solidifying the case for a RBA rate hike.

The Aussie dollar is benefiting from the hawkish RBA pricing, rising against major crosses such as the euro, British pound, and Kiwi, with moves against these currencies offering a cleaner expression of market sentiment than the AUD/USD pair.