Forget about the ANZ and NAB's call for the RBA to remove at least the "emergency accommodation" that brought the official cash rate to a record low of 1.5%.
If the recent trend in Australian consumer spending - or in this case, not spending - continues, we could forget Westpac's outlook for steady rates through to the year 2019 too.
The Australian Bureau of Statistics (ABS) retail trade report showed retail spending dropped by a bigger-than-expected 0.6% in the month of August. Worse, July's retail figure was downwardly revised from no growth to a 0.2% decline.
All but two of the ABS' major retail categories declined over the month - food (-0.6%); household goods (-1.0%); clothing, footwear & personal accessory (-0.2%); cafes, restaurants & takeaway food services (-1.3%). While department store sales rose by 0.7% in August this followed a substantial 2.6% drop in the previous month and the 0.1% August gain in other retailing represents a sharp slowdown from the 1.1% increase in July.
Yes, one swallow does not a spring make...but these are two swallows now - back-to-back monthly declines. "August's fall was the largest since March 2013, and the first back-to-back decline since November 2012. Not since late 2010 has there been a larger two-month slide." (Australian Financial Review)
Likewise, the year-on-year growth rate in retail sales had been on a steady downward slope since the middle of 2014 when they grew at a rate of around 6% to just a little over 2% currently (2.1% in the year to August to be exact).
The weakness in consumer spending is further highlighted by the ABS' report on international trade and services for August that showed no growth in imports of goods and services for the month - more precisely, imports of consumption goods dropped the most, down 4% in August despite the relatively stronger Australian dollar during the period.
Faced with record high household debt, sluggish wages growth (zero real wages growth), rising utility costs, decreasing disposable income and dwindling savings, the Australian consumer has no choice but to cut back on spending - on both staples and discretionary, as the details of the ABS report reveals.
This raises doubts over the RBA's optimistic outlook and its statement that, "The low level of interest rates is continuing to support the Australian economy".
The latest retail trade data (and its trend decline) suggest that household consumption - which accounts for the biggest chunk of GDP (around 60%) - isn't getting much support, if at all, or that any support from lower interest rates is being negated by the above-mentioned factors.
Perhaps the RBA should start thinking about bringing the official cash rate to another level of "emergency" before the weakening household spending turns into a vicious cycle.
Then again, this would just jack up household debt levels (and property prices) to new heights and raise the risks to Australia's financial stability.