SYDNEY, (Reuters) – Australian retail sales edged higher in June but missed market forecasts for the first time in several months, a sign soaring inflation and rising interest rates may be finally curbing consumer demand.
Data from the Australian Bureau of Statistics on Thursday showed retail sales rose 0.2% in June to a record A$34.3 billion ($23.99 billion), short of analyst forecasts of a 0.5% increase and the smallest gain this year.Sales were still up a strong 12.0% on a year earlier, but a chunk of that is due to rising prices rather than volumes.
“Results were mixed across the six industries, with turnover rising in three of them and falling in the others, as cost-of-living pressures appear to be slowing the growth in spending,” said Ben Dorber, head of retail statistics at the ABS.
Sales were strongest at cafes, restaurants, and takeaway food services, followed by clothing, footwear, and personal accessory retailing. Department stores saw the largest fall, while food sales also slipped amid rising prices.Figures out on Wednesday showed consumer price inflation jumped to a 21-year peak of 6.1% in the June quarter, led by energy, construction and food costs.
That report all but guaranteed the Reserve Bank of Australia (RBA) would lift its 1.35% cash rate by 50 basis points at a policy meeting next week, and likely keep hiking every month this year.
The recently-elected Labor government is expected to warn of tougher times ahead when Treasurer Jim Chalmers presents updated budget forecasts later on Thursday. As well as a sharp lift to the inflation outlook, Chalmers is expected to shave half a percentage point from economic growth forecasts made by the previous government back in March.
