Australian retail sales stagnate as elevated rates take toll
AUSTRALIAN retail sales growth stalled in July as elevated interest rates force households to hunker down on discretionary spending.
Sales were unchanged from the prior month, versus economists’ estimate of a 0.3 per cent gain, data from the Australian Bureau of Statistics showed on Friday. The result snapped a three-month stretch of expansion.
The Reserve Bank has held rates at a 12-year high of 4.35 per cent for the past nine months to try to rein in inflation, while highlighting that the outlook for household spending remains a key uncertainty. Consumption accounts for more than half of gross domestic product.
“After rises in the past two months boosted by mid-year sales activity, the higher level of retail turnover was maintained,” Ben Dorber, ABS head of retail statistics, said in a statement. “Western Australia continues to be the standout of the states and territories, having risen for the seventh consecutive month.”
WA is the centre of Australia’s resource economy that’s enjoyed a windfall from high commodity prices.
The RBA next meets on Sept 23-24, when economists and markets anticipate it will leave interest rates unchanged again.
Money markets are wagering about a 70 per cent chance of a rate cut in December. That’s come down from previously fully pricing an easing and reflects stubbornly strong inflation and the RBA’s recent hawkish rhetoric.
Friday’s retail data also showed that clothing, footwear and personal accessory retailing led declines, falling 0.5 per cent, followed by department stores, down 0.4 per cent and cafes, restaurants and takeaways.
The only industry that had a rise in July was food retailing, up 0.2 per cent. BLOOMBERG
Share with us your feedback on BT's products and services
