Already I’m seeing Christmas lovers start putting out their lights on the front of their homes and some shops are getting into the festive spirit with their in-store displays, but the SMH today is telling us to brace for a “frugal Christmas”. One scrooge policymaker, Reserve Bank boss Michele Bullock will be hoping the newspaper is right!

You see, this is exactly what the RBA wants and it’s why it has raised rates 12 times since May last year and could be toying with the idea of another on Melbourne Cup Day. Yep, Michele could easily scrooge our Cup celebrations by hitting us with a rate rise at 2.30 pm, 30 minutes before the race caller says: “Go their racing in the 2023 Melbourne Cup…”

In fact, history has shown that RBA boards have done exactly that on the first Tuesday in November, so the run of economic data between now and November 7 will be crucial to how interest rate worriers enjoy the race that stops a nation.

In many ways, the news that retailers are bracing for a tightwad’s Christmas might be another sign that rate rises are starting to work and therefore no more rises are needed.

The Australian Retailers Association says we’re expected to spend $66.8 billion this year, which is only a 0.1% rise, despite inflation that has driven prices up over the past year. The combined wack of a higher cost of living and inflation has meant consumer staples are taking priority, while consumer discretionary or less important spending is falling.

Last Christmas was a ‘get out of jail’ spending event with the end of the pandemic and lockdown fears, but now the impact of the RBA’s rate rises is set to hose-down the usual enthusiasm for festive spending.

Economists, like the RBA, are looking for signs that the rate rises, which now hit more borrowers as low fixed rate loans roll into higher interest rate repayments, are starting to reduce spending and inflation.

CBA economist Stephen Wu has looked at the 0.1% expected rise in retail spending over Christmas and made the following important point: “If you factor in 2.5 per cent population growth and also factor in inflation, about say 3.5 per cent, then you’re really seeing real per capita spending go backwards…”

That bad news would stop Michele Bullock screaming: “Bah, humbug!”

On Wednesday, I listed the data drops that were both good and bad for inflation and therefore interest rate rises. The score was 6-4, with more economic stats saying inflation should keep falling, but what has happened this week?

Well, for starters, oil prices have fallen as interest rate rises in the US has escalated fears of a US and global recession. The fall this week has been close to 10%, with the oil price per barrel down to US$90 from US $100 earlier in the week, which is good inflation and interest rate news.

Against that, house prices rose 0.9% across the eight capital cities, which was stronger than predicted. Also, new home lending was up more than expected rising 2.2% for the month driven by owner-occupiers.

Adding it up, that plus the fall in petrol prices trumps the house price and lending rises.

The big watch for the RBA and interest rate worriers will be October 19, when the latest unemployment numbers are released. If the jobless rate is higher than the August figure of 3.7%, then the CBA might be right when they argue that rate rises are over.

That could be a great Christmas present for home loan borrowers, provided they don’t make up the numbers in the unemployment report!