Retail sales tick up as consumers embrace warm weather
ABS data shows sales rose 0.7 per cent in August, exceeding analysts’ forecasts.
Retail sales rose above analysts’ expectations last month as the unseasonably warm weather encouraged consumers to spend savings from tax cuts and energy rebates, fresh ABS data has shown.
Sales rose 0.7 per cent in August, up from 0.1 per cent in July and exceeding analysts’ forecasts of a 0.4 per cent rise.
Robert Ewing, head of business statistics, said the warmest August in a century prompted shoppers to bring forward seasonal spending.
“This year was the warmest August on record since 1910, which saw more spending on items typically purchased in spring,” he said.
“This included summer clothing, liquor, outdoor dining, hardware, gardening items, camping goods and outdoor equipment.”
Turnover also rose in most industries, with department stores (1.6 per cent) recording the largest rise among non-food industries. This was followed by clothing, footwear and personal accessory retailing (1.5 per cent) and other retailing (1.3 per cent).
“The lift in turnover from the warmer weather was also boosted by higher discretionary spending as consumers took advantage of Father’s Day sales events during the month,” Ewing said.
Household goods retailing (-0.3 per cent) was the only industry to fall, following heightened spending in recent months due to mid-year sales.
All food-related industries rose, led by cafes, restaurants and takeaway food services (1.0 per cent), followed by food retailing (0.6 per cent).
“More people were out dining at cafes and restaurants enjoying the warm end to the winter months, which also boosted spending on alcohol consumed at home,” Ewing said.
Ewing said retail turnover grew across the country but was most prominent in the eastern states, which experienced warmer weather than the west.
“While the Eastern mainland states led the rises, most states and territories benefitted from the earlier-than-usual spring temperatures. Although, some unseasonal rainfall over parts of Western Australia dampened sales slightly.”
AMP economist My Bui said the retail data was “solid” but cautioned against reading too much into the rebound in discretionary spending.
“Some of this rebound is expected, given currently solid wages growth, still strong employment landscape, coupled with tax cuts and various government rebates while inflation continues to abate – all of which have boosted households’ disposable income,” she said.
The figures also benefitted from Father’s Day sales events and an increase from a low base in July when consumers pulled back spending following earlier EOFY promotions.
Bui said “there is not too much implication here” for the RBA, with another report scheduled between now and its next board meeting in November. AMP expects rate cuts to happen in early 2025.
Last week, the central bank kept interest rates on hold at 4.35 per cent due to persistently high core inflation.
"While headline inflation will decline for a time, underlying inflation is more indicative of inflation momentum, and it remains too high,” it said in its statement.
"Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range."
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