The Australian Bureau of Statistics said retail sales in Australia hit a new record for the fifth consecutive month.
According to figures published today by the Australian Bureau of Statistics, retail sales in Australia hit a new record high for the third straight month in May, with $34.2 billion spent in stores and online – a 10.4 percent increase over the previous year. compared to a year ago and an increase of 0.9 per year. cents more than the previous month.
As sales rise, Australian Retailers Association CEO Paul Zahra warned the gains are unlikely to be permanent, and it also represents higher consumer prices already raging through the economy as inflationary pressures take hold.
“It’s gratifying to see retail sales maintain their strong stance, but the numbers aren’t necessarily an accurate reflection of how the sector is performing in an inflationary landscape,” said Mr Zahra.
“The high sales volumes can be partly attributed to the higher consumer prices we are seeing across the economy, especially in the food industry. As sales rise, operating costs are skyrocketing, in many areas at a much faster rate.
“We are unlikely to see retail spending at this level as the rising cost of living starts to dominate household budgets. A generation of homeowners is experiencing their first rate hikes, so there will be a natural tightening of the belt. When people keep spending in check, discretionary purchases are some of the first things they cut back on.
“Lease costs are increasing for many companies, along with fuel and energy, while supply chains remain limited. The disruption hasn’t stopped since Covid struck; things have only intensified since the war in Ukraine and many small businesses in particular are currently being challenged.
“These challenges come with the labor and skills shortages that continue to hamper many in the industry. The majority of ARA members say the situation has worsened in the past three months, and without government intervention, the situation will only get worse.”
Meanwhile, the RBA has already raised rates twice since May and is widely expected to do so again next week at its July policy meeting, perhaps by 50 basis points to 1.35 percent.
Dominique Lamb, Chief Executive of the National Retail Association, said it’s a great result for the sector, which has been pressured by rising delivery costs, interest rates and increases in wages and pensions.
“This news is certainly welcome, although we know that higher prices, particularly in the food retail and hospitality sectors, have contributed to this growth,” said Ms Lamb.
Five of the six subsectors grew, with the exception of discretionary spending in the apparel, footwear and accessories sector, which declined 1.4 percent.
Department stores rose the most at 5.1 percent, followed by cafes and restaurants and food retail (1.8 percent and 0.8 percent, respectively), other retail (1.5 percent) and household goods (0.4 percent).
“Despite the cost of living and interest rate hikes, consumers are still spending the necessary items on food, department stores and household items,” Ms Lamb said.
“But we are seeing less spending on personal items as consumers struggle with the state of the economy.
“The small businesses in the industry need more government support to drive spending and the NRA will continue to advocate on this issue for our local and family businesses to get back on track,” she said.
Also read RBA rate hike: don’t panic, plan for it
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