SYDNEY, Dec 7 Reuters Australia39;s economy slowed a little in the September quarter as skyhigh prices and rising interest rates sapped consumer spending power, a sign aggressive policy tightening is working to cool demand.

Data from the Australian Bureau of Statistics on Wednesday showed real gross domestic product GDP rose 0.6 in the third quarter, compared with 0.9 the previous quarter and just under forecasts of 0.7.

Annual growth still sped to a heady 5.9 faster than China though largely thanks to a oneoff boom late last year as the economy reopened from pandemic lockdowns.

Household consumption was again the engine of growth with a rise of 1.1 in the quarter, driven by spending on travel, eating out and new motor vehicles. However, that was down from a 2.1 jump in the second quarter and the lowest gain in a year.

There were also signs consumers were tightening their belts as the saving ratio dropped to 6.9, from 8.3 the previous quarter, and peaks above 20 during the pandemic.

That suggests the Reserve Bank of Australia39;s RBA campaign to slow demand, and ultimately inflation, is working.

The decent rise in Q3 GDP probably marks the last hurrah for Australia39;s economy as tighter monetary policy and falling real incomes weigh on spending, said Marcel Thieliant, a senior economist at Capital Economics.

The central bank on Tuesday raised its cash rate a quarter point to a 10year high of 3.10, bringing its total tightening since May to a thumping 300 basis…