Household spending increases in June, powered by EV sales

Australian households have spent more on transport and recreation and culture in June, according to new data from the Australian Bureau of Statistics (ABS). Spending increased by 0.8% month-on-month, with a 3% rise in transport spending attributed to a surge in new vehicle sales, including a significant increase in electric vehicle sales. Nearly one in every two vehicles sold from April to June was either electric or hybrid. Air travel spending recovered from disruptions caused by the Iran war, bringing transport spending back to pre-war levels after a 4.4% decline in April. Excluding transport, spending rose by 0.3%, with recreation and culture spending up by 1.4%, driven by increased spending on electronic goods, performing arts, live entertainment, and gambling, likely due to major sporting events. All eight states and territories recorded spending increases in June, with Tasmania (+1.6%), ACT (+1.4%), and Western Australia (+1.3%) seeing the strongest growth. Despite this, the Commonwealth Bank of Australia expects household spending to soften in the remainder of the year due to declining housing prices. The Reserve Bank of Australia has raised interest rates to 4.35% to combat inflation, with ongoing concerns about energy price impacts. Fuel excise cuts expiring on August 2nd may boost headline inflation, though oil prices are not expected to rise further. The RBA rate tracker suggests no change in the cash rate for the August 11 meeting.