Bracket creep took $41 billion out of household budgets over the last two years, with independent economist Warren Hogan explaining the massive reduction in consumer spending power now meant further interest rate rises were unlikely.
Speaking to Sky News Australia's Business Now on Monday, Mr Hogan maintained the RBA had likely"anticipated" the Treasurer's announcements, adding the bank would probably focus on other concerns when it next met to determine rates. However, economists highlight that any reduction is temporary unless the underlying cost of power generation falls and that a reduction in energy bills may also contribute to higher household spending.
"Bracket creep alone has taken $41 billion out of household budgets in the last two years, that's a pressure that's there, so even though the RBA hasn't raised rates this year, and only raised them once this financial year, we can still see the soft retail spending because of that bracket creep.