2 weeks Ago By Varun Godinho
Australian Retailers are fearing a grim forecast for the remainder of the year, especially over the Christmas period, after new figures released on Thursday showed spending remaining flat in July. The Australian Bureau of Statistics reported retail trade for July 2024 was unchanged from June. Analysts had expected a 0.
3 per cent rise after growth of 0.5 per cent in both June and May. In July, there was a decline in the growth among several retail categories.
Clothing, footwear and personal accessory retailing (-0.5 per cent) had the largest fall, followed by department stores (-0.4 per cent) and cafes, restaurants and takeaway food services (-0.
2 per cent). Household goods retailing and other retailing were both unchanged (0.0 per cent).
The only industry that had a rise in July was food retailing (0.2 per cent). Western Australia was the standout performer for retail spending, with turnover up 0.
2 per cent in July and 4.6 per cent compared with a year ago. Inflation has fallen to its lowest level since March, pulled down by a 5 per cent annual cut to electricity prices as billions of dollars in government rebates came into effect.
Consumer prices rose by 3.5 per cent in the year to July, said the Australian Bureau of Statistics, down from the 3.8 per cent recorded in the 12 months to June.
National Retail Association interim chief executive Lindsay Carroll said that the latest trade figures for July were worrisome, given Australia’s strong population growth, and may not recover in time for the busiest retail season of the year. Carroll noted that retailers, especially small businesses, were struggling and some would even be forced out of business. Customers, now more cost-conscious than before, are spending cautiously.
“Today’s ABS data is also an indicator that consumers are chasing bargains, but this comes at a heavy cost to retailers. “Most smaller retailers cannot afford to rely on heavy discounting strategies to get by, and it is inevitably these businesses that exit the market. “The industry is at the mercy of consumer sentiment; that’s just the nature of retail.
We need policymakers to loosen the reins somewhere or we’re in for a tough Christmas trading period.” But consumer sentiment isn’t likely to shift anytime soon. Already the Reserve Bank of Australia Governor Michele Bullock has ruled out rate cuts this year as “inflation is still too high.
” The central bank left its cash rate unchanged at 4.35 per cent for the sixth meeting in a row, and has two meetings more this year. The RBA lifted interest rates 13 times over an 18-month period to November last year to tame inflation.
The RBA has said it expected inflation to be back within its 2-3 per cent target range until 2026. This is longer than the 2025 figure that the RBA had proposed as recently as May..
