Australian Retail Sales Report

Australian retail sales were unexpectedly flat in July as consumer spending cooled amid persistent pressure from sticky inflation and high interest rates. However, a robust job market kept sales relatively stable.

The Australian Bureau of Statistics reported that retail sales were unchanged month-on-month in July, following a rise of 0.5% in June and 0.6% in May. Markets had anticipated a 0.5% increase for July.

Ben Dorber, head of retail statistics at ABS, stated, “After rises in the past two months boosted by mid-year sales activity, the higher level of retail turnover was maintained in July.”

Retail spending has slowed significantly over the past year due to interest rate hikes and ongoing inflation. Despite this slowdown, sales figures have shown a steady upward trend in recent months.

A strong job market is largely responsible for this trend, as unemployment remains low and participation in the workforce reaches record levels.

Inflation in Australia eased slightly in the June quarter, with decreases in core inflation indicating some relief for consumers. However, inflation readings were higher than expected in July.

Consumer spending has faced pressure from high interest rates following a series of hikes by the Reserve Bank of Australia since 2022. The central bank indicated that further rate increases may be considered if inflation remains persistent.