Australian Retail Sales Surge in September

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Australian retail sales experienced a significant surge in September as consumers flocked to the shops. This sharp increase may potentially argue in favor of a further interest-rate rise next month.

Strong Retail Turnover Growth

According to the Australian Bureau of Statistics, retail turnover rose by 0.9% in September, easily surpassing the economists’ expected increase of 0.3%. This follows a 0.3% rise in August and a 0.6% gain in July.

Factors Contributing to Growth

Several factors contributed to the growth in retail sales. The warmer-than-usual start to spring boosted sales at department stores, as well as household goods and clothing retailers. There was also an increase in spending on hardware, gardening, and clothing items.

The release of a new iPhone model and the introduction of government rebates to counter surging electricity costs for households further supported consumer spending.

Impact on Interest Rates

This rise in consumer spending comes after news that inflation exceeded expectations in the third quarter. As a result, many economists predict that the Reserve Bank of Australia will raise the official cash rate next month, marking the end of a prolonged period of no action.

Weakness in Overall Retail Turnover

Although the increase in spending in September was the largest since January, overall retail turnover remained weak. In trend terms, retail turnover only grew by 1.5% compared to the previous year. This is the smallest trend growth over 12 months in the history of the data series.

Uncertainty and External Factors

The Reserve Bank of Australia has expressed uncertainty regarding how consumers will respond to aggressive interest-rate increases, given the elevated household savings following the pandemic. Additionally, surging immigration is adding to demand across the economy.

Sales Performance by Retail Sector

Most areas of retail recorded sales gains in September. Department stores saw sales rise by 1.7%, followed by a 1.5% increase in household goods retailing. Sales of clothing, footwear, and personal accessories were also solid.

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