Australia's boom may be easing off, according to new figures which suggest consumers are finally slackening in their readiness to spend.

The evidence comes in the main index of consumer confidence, which fell 2.7% in July to wipe out a similar-sized gain the previous month.

The figures, issued by the well-respected Westpac-Melbourne Institute, follows two rapid-fire rises in interest rates to 4.75% by the Australian Reserve Bank to cope with rapidly-rising inflation, at 3% last month.

Australia's economic growth for the first three months of 2002 would produce a breakneck 4.2% expansion if continued for the whole year.

Could be worse

Given the circumstances, however, some are surprised that the decline was not more severe.

Stock markets around the world have slid sharply, the supposedly rock-solid US dollar is in decline, and joblessness in Australia itself is creeping up.

"This is a fairly modest fall in the index, given the proliferation of bad news this month," said Bill Evans, Westpac's general manager for economics.

But some signs were there that the recent rises in interest rates are having an effect in damping down the economy, he said.

Housebuyers have been among the worst hit by inflation and interest rate hikes, with some house prices up nearly 50% in the six months to March 2002, according to the Housing Industry Association.

Household debt is also shooting up, rising 13% to a record level of A$559bn ($303bn) in the final three months of last year.

The most worried about the future, Westpac said, were lower-income households, while in occupational terms confidence among labourers and operators fell 11.8%.