Sombre retail sales likely as consumer pain persists

Poppy Johnston |

May retail sales figures are likely to reflect belt tightening in households.
May retail sales figures are likely to reflect belt tightening in households.

Australian retailers likely endured another subdued month for sales as consumers keep pinching their pennies.

Fresh retail sales data for the month of May is scheduled for release on Wednesday and will land at a time of renewed concern interest rates may need to stay high for longer or go higher to combat lingering price pressures.

The behaviour of consumers remains a source of uncertainty for the Reserve Bank of Australia, which in Tuesday’s minutes from its June interest rate meeting confirmed the narrow path was getting narrower.

The central bank is aiming to bring inflation to heel without slowing the economy too much and pushing the unemployment rate significantly higher.

In April, the Australian Bureau of Statistics recorded weak 0.1 per cent lift in retail sales, which was a little below expectations and followed a 0.4 per cent fall in March.

Higher borrowing costs, rents and other living expenses appear to be weighing on discretionary spending, with sales across clothing, footwear, and personal accessory down in April.

Westpac economists were forecasting a “slightly better but still subdued” 0.3 per cent rise in May, informed in part by a weak reading across its own card activity tracker.

Appetite for home-building will also be sampled as the statistics bureau releases dwelling approvals data for the month of May.

New home approvals have been trending lower as higher interest rates, labour shortages and costly materials take a toll.