From the General Manager IAN HORNE – AHA | SA GENERAL MANAGER
Economic Storm Clouds Ahead Despite increasing volatile times internationally, business confidence in Australia and South Australia is apparently holding up well in the face of rising interest rates and inflation however there are signs households may start winding back on spending and that’s not good for hospitality. Hospitality is more often a discretionary spend and is sometimes the ‘canary in the mine’ i.e., an early warning sign of tightening consumer spending. That said, new figures from the Australian Bureau of Statistics showed household spending was running at a healthy 7.6 per cent annually in April, prior to the Reserve Bank of Australia lifting the cash rate in May. Further, as COVID-19 restrictions have eased, household spending increased in eight of the nine spending categories in April 2022 compared to April 2021. Spending in recreation, hospitality and retail to April continued to rise. Spending on health was the only category to decrease in April 2022. The Australian Institute of Petroleum said the national petrol price average rose 2.1 cents to 199 cents per litre in May but Victoria, South Australia, Western Australia, the Northern Territory, Tasmania, and Canberra were all consistently paying more than $2 per litre.
6 | Hotel SA | W W W . A H A S A . A S N . A U
Further shaking consumer confidence will be a slump in Australian shares as seen in the first half of June. Tens of billions of dollars were wiped off the market on Tuesday 14 June after Wall Street tanked either side of our long weekend. The US sell off of shares was sparked by fears of aggressive interest rate increases by the Federal Reserve after inflation remained stubbornly above eight per cent. Local economists now expect the Australia’s Reserve Bank’s cash rate to rise to 2.10 per cent by the end of 2022, from 0.85 per cent currently, after upwardly
“The certainty is that business confidence will be tested when faced with a new environment of higher inflation, rising interest rates, and risks to economic growth.” Back to Contents
