Australian retail sales growth in July exceeded market expectations

Australian retail sales peaked in July despite all forecasts. Inflation data, along with statistics on the labor market facilitated the rise, encouraging consumer spending. Although, an increase in borrowing costs has been witnessed.

Preliminary data from the Australian Bureau of Statistics (ABS) showed retail sales rose another 1.3% in July. The figure exceeded the expectations of 0.3% growth. At the same time, retail trade surged at an annual rate of 16.5%.

Shopping in supermarkets made the largest contribution to sales, the statistics says. Spending on clothing, footwear and accessories keeps rising.

Consumers have reduced costs on household goods due to soaring inflation. Thus, price hikes have forced citizens to postpone major purchases, including new appliances.

July’s reading also revealed growing sales of Australian retailers, and the trend is likely to continue in the third quarter. The Reserve Bank of Australia is planning one more interest rate rise, given the increase in consumer spending due to higher inflation.

The central bank raised another 50 basis points (to 1.85%), as for the beginning of the month. Further tightening of monetary policy is also forecasted as inflation hits a 30-year high.

Unemployment in Australia has reached its lowest level for the last 48 years. Whereas the labor market cannot boast of substantial wage growth. The figure is less than half the pace of inflation. 

The statistics had little impact on the Australian dollar. A weakening of the currency occurred only last week, after the speech of Fed’s Chairman Jerome Powell, last week. 

The picture would not be evident until the release of ABS data that is scheduled for September 5th.