Growth, inflation and labour market all easing
Our data mapping points to a slight drop in retail sales in August.
This month’s index follows a departure from our data and the official ABS measure last month. While our high-frequency weekly consumption data shows retail spending tracking sideways (although hospitality continues to outperform) the ABS data has outperformed our expectations. Whether this continues remains to be seen.
The August NAB Monthly Business Survey recorded more encouraging data for the retail sector – trend conditions remain at a very elevated +26.6. Product price growth remains at record levels– the survey measure of retail final product prices rose 3.3% at a quarterly rate in August, unchanged from June.
It remains our view that central bank rate hikes in response to high inflation will see GDP growth moderate in 2023, to around 1.75% y/y. While retail spending has remained robust through the pandemic, higher official interest rates will eat into disposable income and are very likely to lead to reduced spending. While this is not likely to bite until late 2022, 2023 is likely to be a slower year for consumers and therefore the retail sector.
For more information, please see the NAB Cashless Retail Sales Index (August 2022)
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