Australian retail sales rose slightly in August as consumers continued to cut spending amid rising living costs and borrowing costs, suggesting interest rates may not need to rise further.
Data from the Australian Bureau of Statistics (ABS) showed on Thursday that nominal retail sales rose 0.2% in July to August, missing analysts’ forecasts for a 0.3% gain.
Sales of A$35.4 billion ($22.56 billion) were up just 1.5% from a year earlier, the smallest percentage increase since August 2021.
The 2023 FIFA Women’s World Cup boosted sales this month, with strong demand for fan gear and spending at cafes, restaurants and takeaway outlets.
However, retail sales of food and household appliances registered a decline of 0.3% and 0.4% respectively.
A general trend of subdued consumer spending led the Reserve Bank of Australia to hold off on rate hikes for three consecutive months, with rates expected to remain unchanged at 4.1% in October.
“Given that high inflation and strong population growth have boosted retail sales over the past year, historically weak trend growth highlights the extent to which consumers have held back in the face of the cost of living,” said Ben Dorber, head of retail statistics. Abs.
So far, the rate hikes — a 400-basis-point increase starting in May 2022 — have added hundreds of dollars to average monthly mortgage payments and weighed on consumer spending, which was good initially, partly because of savings accumulated during the pandemic.
But austerity has had a disproportionate impact on families.
Commonwealth Bank of Australia data shows younger Australians who rent or have a mortgage are cutting back on buying, while older Australians who enjoy higher savings rates continue to spend.
($1 = 1.5694 Australian dollars)
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