June retail sales rose a stronger-than-expected 0.5% m/m driven by mid-year sales as consumers are still prepared to spend at the right price. The annual rate rose 2.9% y/y from 1.7%, the highest since May 2023, but it continues to be boosted by higher inflation. Q2 sales volumes fell 0.3% q/q to be down 0.6% y/y and 2% lower than the 2022 peak. Consumption remains weak as cost-of-living pressures persist but it hasn’t plummeted and so is in line with an on hold RBA.

• The June strength was broad based with household goods up 1.1% m/m, department stores +1.0% and other +1.0%. The latter two have seen a reasonable year rising 4.2% y/y and 6.3% y/y. Restaurants & takeaway sales were flat in June to be up a lacklustre 1.1% y/y.
• The ABS reported that retailers had said consumers were looking for the “best deals before buying big-ticket items like furniture, bedding, TVs and laptops”. Consumers are very price sensitive but will spend.
• The July and Q3 data should give an indication if tax cuts and other stimulus is being spent or saved.

Source: MNI - Market News/Refinitiv

Australia retail sales values %

Source: MNI - Market News/Refinitiv