By James Glynn
SYDNEY–Australian retail sales weakened sharply in June as consumers ignored midyear price discounting amid higher interest rates, adding to the pain for those already facing surging living costs and dealing with huge increases in their mortgage repayments.
Retail turnover fell 0.8% in June from May, the Australian Bureau of Statistics said Friday. Economists had expected a flat reading.
The fall in retail sales in June follows a 0.8% rise in sales in May and a 0.1% fall in April, the ABS said.
The data is further evidence that the economy is slowing and that consumers are straining under the weight of 400 basis points of interest-rate increases in a little over a year.
The Reserve Bank of Australia is expected to consider a further increase in the official cash rate at its policy meeting on Tuesday, but a significant cooling in inflation in the second quarter and softness in retail sales will argue for a pause.
There was extra discounting and promotional activity by stores in May this year, leading up to midyear sales events. This delivered a boost in turnover for retailers, but that proved to be temporary as consumers pulled back on spending in June, the ABS said.
Department-store sales fell 5.0% in June, followed by clothing, footwear and personal-accessory retailing, which dropped 2.2%.
Food-related spending was mixed, with a fall in cafes, restaurants and takeaway-food services, and a rise in general food retailing in June.
With food prices still rising, consumers are responding to these price rises by changing to cheaper brands or simply buying less, the ABS said.
Write to James Glynn at [email protected]
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