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Australian Spending Surge Lifts Yields and Revives RBA Tightening Bets

Investors are reassessing the policy path after ABS figures showed discretionary-led strength in October spending.

People sit and watch the sunset over the Central Business District (CBD) skyline in Sydney, Australia, July 10, 2025. REUTERS/Hollie Adams

Overview

  • ABS data show the monthly household spending indicator rose 1.3% in October to A$78.4 billion, pushing annual growth to 5.6%.
  • Discretionary purchases drove the gains as promotions boosted clothing, footwear, furnishings and electronics, while concerts and festivals lifted hospitality and hotel stays.
  • Goods outlays climbed 1.7% and services spending rose 0.8%, with PerthNow reporting increases across all nine ABS categories.
  • Headline inflation quickened to 3.8% in October and the trimmed mean reached 3.3%, both pressuring the RBA’s 2–3% target band.
  • Three-year yields hit 4.035% as investors priced a split chance of a May hike and about 30 basis points of tightening by end‑2026, while the cash rate remains 3.6% with a hold expected next week.