Growth, inflation and labour market all easing
We see retail sales continuing to grow in April, albeit at a somewhat slower pace than previous months.
We see retail sales continuing to grow in April, albeit at a somewhat slower pace than previous months. Inflationary concerns continue to escalate, particularly for petrol and food. While petrol prices eased somewhat following the 22c excise cut announced in the budget, a lower AUD and choppy oil prices are eroding this. The RBA has now lifted rates and we expect further rate rises in coming months.
That said, the NAB Monthly Business Survey continues to report generally very strong business conditions and solid confidence. Further, the April survey recorded a significant pick-up in conditions in the recreation & personal services sector following a period of sustained weakness during the pandemic.
Cost pressures continue to build however, with labour cost growth up to 3.0% and purchase cost growth reaching 4.6% (in quarterly terms) – both new highs. However, output price inflation eased with final product prices rising 1.7% and retail prices up 2.1%. Still, these rates of price growth remain high in the history of the survey and the strength in underlying costs suggests inflationary pressure is likely to continue building over coming months – a challenge for retail.
For more information, please see the NAB Cashless Retail Sales Index (April 2022)
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