MNI ANALYSIS: Australia Retail Sales Up But No Price Pressures

--Implicit Price Deflator -0.1% Q/Q

By Sophia Rodrigues

     SYDNEY (MNI) - Australia's retail sales rose more than expected in June and

turnover in volume terms also rose, suggesting a pick-up in household

consumption in Q2 but the fall in implicit price deflator shows lack of

inflationary pressures.

     The data would comfort the Reserve Bank of Australia as far as growth

outlook is concerned but subdued inflation remains a worry.

     Data published by the Australian Bureau of Statistics Friday showed retail

sales rose 0.4% m/m in June, beating MNI median forecast for a 0.3% rise. The

gain follows a 0.5% rise in April and 0.4% increase in May, and marks the best

quarterly sales since the three-month period to June last year.

     In trend terms, retail sales rose 0.3% m/m in June, slowing from 0.4% in

May but this is a significant improvement from a flat m/m growth in August last

year.

     The latest growth was driven by a strong rise in clothing and accessories

for the second straight month, up 1.7% m/m in June versus 2.3% rise in May.

Household goods retailing also picked up in June from a soft 0.1% rise in May.

The food-retailing categories also performed well in June, and the only key

laggard was department stores which fell 1.2% m/m.

     In Q2, retail sales in volume terms rose 1.2% q/q versus 0.2% in Q1, well

above MNI median forecast and marking the best quarter since Q2 of last year.

The rise was driven by all categories of retail, with department stores the best

performer at 2.2% rise versus 0.1% in Q1.

     However, the implicit price deflator fell in Q2, down 0.1% versus 0.4% rise

in Q1, suggesting lack of inflationary pressures. The price deflator was the

worst for department stores, down 0.4% and for clothing and footwear, down 0.4%.

     Below is table for retail turnover (current prices) for June:

                                                June                         May

--------------------------------------------------------------------------------

                                  (M/M %, seasonally          (M/M %, seasonally

                                           adjusted)                   adjusted)

Retail Sales                                    +0.4          +0.4 (no revision)

                                 +0.3 (range +0.1 to

MNI Median                                     +0.5)

Retail Sales (Trend)                            +0.3     +0.4(revised from +0.3)

Food Retailing                                  +0.4                        +0.4

Household Goods                                 +0.4                        +0.1

Clothing, Footwear etc                          +1.7                        +2.3

Department Stores                               -1.2                        +3.6

Other Retailing                                  0.0                         0.0

Cafes, Restaurants,

Takeaways                                       +0.9                        -0.7

     Below is table for retail turnover (volume terms) for Q2:

                                                   Q2                         Q1

--------------------------------------------------------------------------------

                                   (Q/Q %, seasonally         (Q/Q %, seasonally

                                            adjusted)                  adjusted)

Retail Sales (Volume)                            +1.2         +0.2 (no revision)

MNI Median                        +0.8 (+0.4 to +0.8)

Food Retailing                                   +1.6                       +0.7

Household Goods                                  +1.4                       +1.3

Clothing, Footwear etc                           +2.0                       +1.0

Department Stores                                +2.2                       +0.1

Other Retailing                                  +0.7                       +0.1

Cafes, Restaurants,

Takeaways                                        +0.1                       -0.4

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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