Australian retail sales rise in August

Bloomberg

Australian retail sales climbed for an eighth straight month in August, indicating the nation’s cashed-up households are coping well with rapid interest-rate increases to tackle escalating inflation.
Sales advanced 0.6% from July, exceeding economists’ forecasts for a 0.4% gain, Australian Bureau of Statistics data showed. Retailers have posted higher sales every month this year.
The rise was driven by “the combined increase in food related industries, with cafes, restaurants and takeaway food services up,” said Ben Dorber, head of retail statistics at the ABS. Department store sales rose to a new record, while household goods retailing had its largest rise since March.
Policymakers are closely watching spending patterns to gauge the impact of rate hikes, which operate with a lag.
The resilience in consumer spending is likely to bolster expectations the Reserve Bank will raise rates by a half-percentage-point for a fifth straight month to take the cash rate to 2.85%.
The RBA has signaled further hikes ahead, prompting money markets to price in a rate of about 3.4% by year’s end.
The RBA maintains that households are in a solid position to weather higher borrowing costs, having used pandemic-era stimulus to build up their savings or make early repayments on their mortgages.
In addition, unemployment of just 3.5% means most Australians have an income to meet their obligations.
Policymakers are closely watching spending patterns to gauge the impact of rate hikes, which operate with a lag. A sudden weakening could prompt the RBA to pause or slow its tightening cycle as household spending accounts for roughly 60% of GDP.