Australia's June retail weak: Travel boom or household squeeze? – ANZ

Analysts at Australia and New Zealand (ANZ) banking group offer their take on the Australian Retail Sales data for June and its implications on the Reserve Bank of Australia’s (RBA) policy path.

Key quotes

“Retail sales increased by 0.2% m/m in June. This was the weakest result this year, but not weak enough to derail the RBA from a 50bp increase in the cash rate next week.”

“It isn’t clear yet whether this result is due to high inflation, rate hikes and low consumer confidence, or the strong uptake of overseas travel, which would shift some household spending away from the Australian retail sector.“

“The ABS’s provisional estimates for overseas travel show the gap between departures and arrivals widened in June, with 20% more departures than arrivals in June vs 1% more departures in May.”

“ANZ-observed spending in June and July showed no cliff in spending, so it is still too early to call an inflation and interest rate led slowdown.”