Hidden detail in booming retail sales figures

Catie McLeodNCA NewsWire
Not Supplied
Camera IconNot Supplied Credit: News Regional Media

Australian retail sales have defied market expectations to hit another record level amid tough economic conditions.

Figures released on Wednesday by the Australian Bureau of Statistics showed $34.23bn was spent in stores and online during May.

The monthly spend increased by 0.9 per cent from April, overshooting the 0.4 per cent it was widely tipped to rise by.

But consumers are spending – not necessarily buying – more because inflation has driven prices up.

BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said inflation was behind much of the boost.

“Price inflation will have made a sizeable contribution to the increase in retail sales in the month, in particular for food sales and spending at cafes and restaurants,” he said.

“Inflation will continue to boost retail turnover, but it poses a material headwind for spending in volumes terms due to the squeeze on household budgets.”

Mr Langcake said strength in the labour market would provide a strong platform for consumer spending this year despite higher interest rates imposed to dampen inflation.

Australian retail sales have defied market expectations in May.
Camera IconAustralian retail sales have defied market expectations in May. Credit: News Regional Media

The rise in May was the fifth consecutive monthly rise in retail turnover and puts the national spend 10.4 per cent higher than it was a year ago.

Quarterly Economy Wide Statistics director Ben Dorber said there was growth across five of the six retail industries.

“Higher prices added to the growth in retail turnover in May. This was most evident in cafes, restaurants and takeaway food services and food retailing,” he said.

The rate of inflation in Australia is running at 5.1 per cent, according to the ABS, and it is tipped to reach as high as 7 per cent later in the year.

Originally published as Hidden detail in booming retail sales figures

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