Data published by the Australian Bureau of Statistics (ABS) showed that retail sales increased by 0.5% in July, partially offsetting the 0.8% drop in June and exceeding economists' forecasts (+0.3%). Meanwhile, in annual terms, retail sales growth slowed to 2.1% (the weakest growth since August 2021) from 2.3% in June.
The ABS said sales at department stores rose 3.6% after falling 4.8% in June, while retail sales of clothing, footwear and personal accessories increased 2.0% after falling 2.3%. Sales of household goods declined again (-0.2% vs. -0.1% in June), while food retail sales remained unchanged after rising 0.2% in June. Sales of cafes, restaurants and takeaway food services rose by 1.3% in July.
Ben Dorber, ABS head of retail statistics, said that while there was a rise in July, underlying growth in retail turnover remained subdued. Overall, the sluggish trend in consumer spending is the main reason why the Reserve Bank of Australia has suspended policy tightening. Markets are still confident that the RBA will leave rates unchanged in September (with a 97% probability), but there is a risk - about 40% - that rates could peak at 4.35% by the end of this year.