Business · Economy · 2 hrs ago
Australian rate rises have yet to curb household spending
Australia’s Reserve Bank has raised interest rates four times this year to slow spending and bring inflation back below 3%.
The increases have pushed rates to their highest level in 15 years and raised mortgage costs.
Household spending is still nearly 7% higher than a year ago, even as economic activity has slowed.
Some of the increase reflects higher prices for essentials, but Australians are also spending on electric cars and overseas travel.
Inflation reached 4% in August, driven by higher oil costs, major construction projects and businesses raising prices.
Mortgage costs are squeezing some borrowers, but offset accounts, debt-free homeowners and renters mean higher rates do not affect every household in the same way.
Economists say the rate rises may not have fully affected the economy yet, and could be less effective against inflation than in the past.
Falling home prices may eventually reduce spending, but the Reserve Bank’s research suggests that effect will take time.
The Reserve Bank of Australia’s four interest rate rises this year have not yet stopped household spending from growing.
Australian household spending was up nearly 7% compared with a year earlier, according to Australian Bureau of Statistics estimates.
The RBA has raised its key cash rate to reduce spending and bring inflation back below 3%.
Inflation reached 4% in August, while higher rates and prices left 2% of borrowers unable to afford essential expenses.
Economists cited in the article say rate rises may not yet have fully affected the economy.
- Who
- The Reserve Bank of Australia has raised interest rates, while Australian households continue to spend.
- What
- Household spending has grown despite four rate rises this year.
- When
- The first rate rise of the year was in February; the article was published on 13 October 2026.
- Where
- Australia.
- Why
- The RBA is raising rates to reduce household spending and discourage businesses and workers from seeking higher prices and wages, aiming to bring inflation below 3%.
This story does not have two clearly opposing sides.
The RBA made the first of this year’s four rate rises.
Inflation reached 4%.
Household spending was still growing rather than going backwards.
- Rate rises
- Four this year
- Household spending
- Up nearly 7% compared with a year earlier
- Inflation
- 4% in August
- Borrowers unable to afford essentials
- 2%
- Offset balances
- Nearly $350bn in total
What people are saying
You just didn’t have the same amount of capacity to pay off earlier and have offsets accounts and all that sort of thing
We’re probably not seeing a major effect yet, but in theory, it should be starting to happen
Sources
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