Australian retail sales beat expectations, hit 6-month high in May

Investing.com– Australian retail sales grew more than expected in May from the prior month, hitting a six-month high as consumer spending showed some resilience despite rising interest rates and a high cost of living.

grew 0.7% in May from the prior month, data from the Australian Bureau of Statistics (ABS) showed. The reading was higher than expectations for growth of 0.1%, and a flat reading in April.

Retail sales also grew to A$35.52 billion (A$1= $0.6621)- their highest level since a record high hit in November 2022. 

The ABS attributed the rise in sales to a larger number of promotional activities and discounts through the month, which retailers took advantage of. 

“Just as we saw during the November Black Friday sales last year, consumers appeared to take extra advantage of discounting during large sales events in May in response to cost-of-living pressures,” Ben Dorber, ABS head of retail statistics, said in a note. 

This saw online-only retailers log strong sales, while household goods sales also increased through May.

Food retailing continued to be a sole bright spot, with demand for eating out and takeaway food spurring consistent increases in sales. But the ABS also attributed this to higher food costs, which have risen steadily over the past year amid supply-side shortages.

While May’s retail sales reading was better than expected, it was still only marginally higher than readings seen over the past six months.

Retail spending has come under increased pressure from high inflation and rising interest rates, which have eroded household savings and greatly weighed on discretionary spending.

While data on Wednesday showed that Australian grew less than expected in May, the miss was largely due to weaker fuel prices. A core reading showed that underlying inflation remained strong in Australia, and is likely to further pressure retailers in the coming months. 

Source link