AUSTRALIA DATA: Retail Sales Stronger Than Forecast, Aided By Weather/Tax Cuts

Australian August retail sales were above expectations. We rose 0.7%m/m, against a 0.4% forecast, while the prior month was revised up to +0.1%m/m, versus flat initially. The August rise was the strongest since Jan of this year (+1.0%). 

• At face value the data suggests some positive impact coming through from the government's tax cuts/costs of living relief measures. The ABS also noted that: “This year was the warmest August on record since 1910, which saw more spending on items typically purchased in spring. This included summer clothing, liquor, outdoor dining, hardware, gardening items, camping goods and outdoor equipment.”
• In terms of the detail by sub-industry, food rose 0.6%m/m, after a 0.2% gain in July. Household goods were down -0.3%m/m, after a July -0.1% dip. This was the only sub category to fall.
• Apparel rose 1.5%, department stores up 1.6%, after both categories fell in July. Cafes were up 1.0%m/m, while other 1.3%m/m. This fits with the ABS's point outlined above.
• In y/y terms spending rose 3.1%, this was the strongest pace since mid 2023, see the chart below. Base effects may help keep y/y momentum resilient in the next few months. Focus is likely to rest on spending trends in coming month, with the resilient y/y trend unlikely to give the RBA cause to shift its policy bias (at least on this backdrop alone). 

Fig 1: Australian Retail Sales Y/Y Trend Improving