Tax cuts saved, no problem for rate cuts

The RBA has been aware of the possibility that consumer spending could be stronger than projected, especially given the significant boost to household income from the Stage 3 tax cuts. This would complicate their goal of sustainably returning inflation to target.

The below video from Westpac provides an overview of the latest Westpac-DataX Consumer Panel. It provides some good news for the RBA, indicating that the income boost from the Stage 3 tax cuts has yet to convert into increased expenditure.

Other data sets corroborate:

Going nowhere:

Inflation smashed:

Expectations fine:

Add more immigration to cap wages and cost-of-living relief to crush 2025 administered prices and the RBA should cut in December.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.