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Retail Volumes Sink As Inflation Pressures Weigh

AUSTRALIA DATA

Q1 real retail sales fell 0.4% q/q, slightly more than expected, after rising 0.4% q/q. They fell 1.3% y/y after -1.0% in Q4 and have been posting negative annual growth for a year now. The level of sales volumes peaked in Q3 2022 and is now 1.8% below that level as cost of living pressures and higher mortgage payments impact household discretionary spending. Q1 private consumption also includes services spending, but it is looking like it will be weak when GDP is released on June 5.

  • The softness in Q1 sales volumes was driven by big ticket items such as large household items, according to the ABS. Food retailing was unchanged, department stores down 0.4% q/q while clothing & footwear rose 1.3% and restaurants & cafes +0.3%.
  • With the working population rising 0.7% q/q in Q1, spending per capita fell for the seventh straight quarter and as the ABS says shows clearly “how much consumers have pulled back”. Continued elevated inflation for non-discretionary items, such as insurance and healthcare, has driven the considerable cut back in discretionary spending.
  • Retail prices rose 0.6% q/q after 0.2% q/q in Q4.
Australia retail sales y/y%

Source: MNI - Market News/Refinitiv

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