By James Glynn
SYDNEY–Australian retail sales rose by more than expected in July, adding to uncertainty about consumers and their willingness to spend against a backdrop of falling real wages, rising living costs and soaring mortgage interest rates.
Retail sales rose 0.5% in July from June, beating the 0.3% increase expected by economists, the Australian Bureau of Statistics said Monday. The rise in July follows a 0.8% fall in June and a 0.8% rise in May.
The volatility in retail sales supports the Reserve Bank of Australia’s frequent warnings that there can be no certainty around consumer demand despite rising pressure on household budgets.
Consumer spending is being supported by historically low unemployment rates, while many households still have significant savings buffers that were built up during the Covid-19 pandemic.
For now the RBA has official interest rates on hold, but has indicated that it could tighten further if demand doesn’t cool.
All eyes will remain on household budgets, as many thousands of home buyers are migrating from ultra-low fixed mortgage interest rates to sharply increased variable interest rates, with the peak of the pain now underway.
Department store sales rose 3.6% in July, followed by clothing, footwear and personal accessory retailing, which increased 2.0% over the month, the ABS said.
Household goods retailing recorded a second consecutive fall of 0.2%, the eighth monthly fall in turnover in the past 12 months, the data showed.
Meanwhile, food-related spending was mixed, with cafes, restaurants and takeaway food services up 1.3%, while food retailing remained unchanged, the ABS said.
Write to James Glynn at [email protected]; @JamesGlynnWSJ
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