MNI BRIEF: RBA Rate Hikes Weigh On Consumers

The Reserve Bank of Australia's decision to lift rates to a 10-year high continues to weigh on domestic consumers according to two closely-watched surveys of sentiment and spending intentions.

The Westpac-Melbourne Institute Consumer Sentiment Index increased from 78 in November to 80.3 in December, though it remains at recessionary levels. Inflation, interest rates, the Budget and taxation, and economic conditions remain the main concerns. However, there were some signs that consumers believe the bulk of the rate tightening cycle has passed.

Commonwealth Bank's November Household Spending Intentions Index rose 1.9% m/m, but was flat month-on-month in seasonally adjusted terms. The year-on-year increase in the HSI eased to 3.2% in November, down from 7.5% in October. The RBA hiked rates for an eighth consecutive meeting on Dec 6, lifting them 25bp to 3.1% . (See MNI RBA WATCH: RBA Hikes By 25bp, February Increase On Radar)