According to data released by the Australian Bureau of Statistics (ABS) on Tuesday, retail sales increased 0.6% in May compared to a 0.1% increase in April. What analysts had anticipated was a 0.2% increase.
A$35.9 billion in sales ($23.9 billion) represented a 1.7% increase over the previous year, but this was still significantly less than the 2.5% annual population growth rate, which suggests lower spending per person.
Robert Ewing, head of business statistics at ABS, stated that cautious consumers who took advantage of early end-of-financial-year promotions and sales events increased retail turnover.
“Retail establishments still depend on sales events and discounts to encourage discretionary spending.” It’s possible that expenses were moved up from June, when the fiscal year ended, to May.
This weakness is largely the result of high interest rates, which the Reserve Bank of Australia (RBA) is intentionally causing as it fights to keep inflation, which is currently running at 4 percent annually, under control.
The central bank has been maintaining rates at a 12-year high of 4.35 percent for several months, but if inflation does not decline as expected, another increase may be required.
Although consumption has decreased as expected, there is a chance that it will increase once more due to significant tax cuts that will start this month and give average wage earners an additional A$1,500 annually.
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