Australia Retail Sales Power Ahead in Sign of Economic Strength
2022.05.27 08:51
Australia Retail Sales Power Ahead in Sign of Economic Strength
(Bloomberg) — Australian retailers recorded a fourth consecutive month of sales gains, suggesting households are so far weathering a spike in the cost of living from surging fuel and other prices.
Sales advanced 0.9% in April to a fresh record A$33.9 billion ($24.1 billion) and just shy of economists’ estimates for a 1% increase, Australian Bureau of Statistics data showed Friday. In response, the Australian dollar edged higher to trade at 71.20 US cents at 11:34 a.m. in Sydney.
“There were strong rises in both food retailing and cafes, restaurants and takeaway food services,” said Ben, James, director of Quarterly Economy Wide Statistics at the ABS. “This is a contrast to the consumer behavior previously seen during the pandemic, where these two industries would consistently move in opposite directions as outbreaks and restrictions either tightened or eased.”
The data highlight underlying momentum in the A$2.2 trillion economy and a degree of resilience among consumers who are grappling with rising interest rates and a cooling property market. The Reserve Bank earlier this month increased borrowing costs for the first time in 11-1/2 years to rein in inflation.
A business survey released by the ABS on Thursday showed more than a third of all firms plan to raise the price of their goods or services by more than usual over the next three months.
That suggests a strong economy-wide inflationary impulse and raises questions over the sustainability of the strong run in household spending. Consumption accounts for almost 60% of the country’s annual economic output.
The RBA on May 3 raised the cash rate earlier than expected and by more than forecast to 0.35%, and signaled further hikes to come. Money markets are pricing in a rate of 2.7% by year’s end, while economists are less hawkish and see it below 2%.
Friday’s data showed New South Wales was the only state or territory to record a fall in retail sales.
©2022 Bloomberg L.P.
