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ANZ: July Dip In Spending No Cause For Alarm…Yet

AUSTRALIA

ANZ note that “the July dip in ANZ-observed spending was a little sharper than in previous years once we take higher inflation into account, though still within the ‘normal’ range. In nominal terms, total ANZ-observed spending excluding petrol in the week to 24 July fell 17.0% compared with the last week of June. This is similar to seasonal dips in 2019 (-16.5%) and 2020 (16.9%), but much smaller than the Delta-impacted dip in the week to 24 July 2021 (-29.0%). There’s no cause for alarm yet but we will be watching consumer spending closely in coming weeks to identify an interest-rate led slowdown. Given our forecast of a further 200bp hike in the cash rate, we expect to see consumer spending growth slow down by year end.”

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ANZ note that “the July dip in ANZ-observed spending was a little sharper than in previous years once we take higher inflation into account, though still within the ‘normal’ range. In nominal terms, total ANZ-observed spending excluding petrol in the week to 24 July fell 17.0% compared with the last week of June. This is similar to seasonal dips in 2019 (-16.5%) and 2020 (16.9%), but much smaller than the Delta-impacted dip in the week to 24 July 2021 (-29.0%). There’s no cause for alarm yet but we will be watching consumer spending closely in coming weeks to identify an interest-rate led slowdown. Given our forecast of a further 200bp hike in the cash rate, we expect to see consumer spending growth slow down by year end.”