ANN/THE STRAITS TIMES – Australian retail sales rebounded surprisingly strongly in July, suggesting the nation’s heavily indebted households retain spending power, even after the Reserve Bank of Australia’s (RBA) 12 interest rate increases.
Sales advanced 0.5 per cent from a month earlier, when they declined 0.8 per cent and compared with estimates for a 0.3 per cent rise, Australian Bureau of Statistics (ABS) data showed yesterday. The jump was driven by non-food industries.
“The rise in July was boosted by additional spending at catering and takeaway food outlets linked to the 2023 FIFA Women’s World Cup and school holidays,” said ABS’ head of retail statistics Ben Dorber.
The strength in household spending jars with downbeat consumer sentiment and raises questions over whether the RBA needs to do more to curb demand and cool prices.
Policymakers will now turn their attention to monthly inflation data tomorrow to further inform their thinking ahead of next week’s September rate meeting.
The rate-sensitive three-year government bond yield edged higher and the Australian dollar held onto earlier gains following the data.
The RBA left the cash rate at 4.1 per cent earlier in August to assess the impact of its tightening cycle that began in May 2022, while keeping the door ajar to further tightening.
Retail sales are an important factor in rate decisions, given that consumption accounts for roughly 60 per cent of gross domestic product.
