The status of consumer confidence and household spending will be monitored closely after last week spiking to its highest rate in 16 weeks.
Consumer confidence as tracked by the weekly ANZ-Roy Morgan survey has been subdued in recent months in the face of rising inflation and interest rate hikes.
The Reserve Bank of Australia pointed to household spending as a source of “uncertainty” ahead of its September decision, noting that consumer confidence was generally falling but household incomes were also benefiting from the tight labour market.
CommSec economist Craig James said the central bank has been hiking interest rates aggressively to prevent inflation becoming entrenched in consumer habits.
Known as consumer “inflation psychology”, it is when consumers and businesses come to expect inflation at a certain level and adjust their behaviour, wages, leases and selling prices accordingly, which locks in inflation for a longer period.
The rising cost of living continues to plague households, with retail petrol prices ticking upwards slightly last week as major cities hit the top of their fuel cycles.
