The latest retail spending figures suggest that Canberra shoppers increased their spending by an extraordinary 2.2 per cent in August, apparently oblivious to the Reserve Bank’s hike in interest rates in the same month.
No other state or territory lifted spending by more than 1.3 per cent.
In the month in which Australian interest rates were hiked, US financial markets collapsed and the Australian share market temporarily turned down Canberra consumers splurged an extra $1.4 million on food, an extra 2.7 million on hospitality and services, and an extra 3.7 million on household goods...
Over the year to August only the mining boom states of Western Australia and the Northern Territory increased their spending faster.
ACT citizens increased their spending on clothing and soft goods by 28 per cent in the year to August, their spending on hospitality and services by 15 per cent and their spending on food by 8.8 per cent. Total spending grew by 6.8 per cent, well above Canberra’s 2.0 per cent rate of inflation.
The Chief Minister said the spending boom reflected the confidence Canberra residents had in the ACT economy.
“That they can spend so highly in these luxury areas is a sign of their positive outlook and a direct result of the average wage of a Canberrans being almost $200 a week more than the national average,” Mr Stanhope said.
Last month the Australian Bureau of Statistics reported that the average weekly ordinary time wage in the ACT was $1,287.50 - well in excess of the national average of $1,088.40.
The ACT’s unemployment rate is 2.8 per cent, the lowest of any state or territory. The ACT is the only region of Australia in which the number of vacant jobs exceeds the number of people looking for work.
Nationwide, retail sales jumped by 0.7 per cent in August, more than double the market expectation of a 0.3 per cent increase. Spending on imports climbed 5.5 per cent in August, more than offsetting a 1.8 per cent rise in income from exports.
The news pushed up the Australian dollar more than half a US cent to 88.94 from 88.19 on renewed expectations of another hike in Australian interest rates, perhaps as soon as November.
The Treasurer Peter Costello yesterday talked down the prospect of a rate hike during the election campaign saying that while Australia faced inflation challenges “the recent figures showed that inflation is still within our band, considering the fact that we are now at a terms of trade peak”.
The Reserve Bank yesterday announced that it had decided to keep interest rates on hold at its meeting on Tuesday. When it next meets on Melbourne Cup Tuesday November 6 it will have with it the inflation figures for the September quarter to be released on October 24.
If as is now expected those figures show that inflation has jumped in spite of the August interest rate hike the Reserve Bank will be under pressure to deliver another one during the election campaign in November, its tenth hike in a row, taking the cash rate to 6.75 per cent and the standard bank variable mortgage rate to 8.32 per cent.
Non-bank lenders including Wizard, Sapphire and RAMS are now charging more than the banks, reducing pressure on the banks to offer discounts.
