The monthly figure for retail spending in July was unmoved from the June figure, seasonally adjusted.
The annual growth rate rose to 2.3% compared with July 2023 but that was below both the inflation rate (3.5% in July) and population growth, estimated around 2.5%.
It was also considerably below the previous annual growth figure of 2.9%.
Friday’s official ABS figures show food retailing was the only sector to record a rise in July with turnover in other industries dropping or remaining flat.
Consumers holding their cash closely
The figures give an early indication that Australians are so far unwilling to spend any cash generated through the federal government’s tax cuts as well as generous energy rebates which both took effect in July.
The federal government announced an across-the- board $300 household energy rebate as part of the federal budget.
The Queensland government followed with an additional $1,000 rebate in the run-up to the state election in October while the Western Australian government also topped up the federal rebate with another $400.
The July data shows per capita retail spending continues to contract with the June quarterly figures showing a 0.3% fall in retail volumes for the quarter and per capita retail volumes dropping by 0.9%.
ABS head of retail statistics Ben Dorber said today’s flat result followed growth of 0.5% in the previous two months which he attributed to mid-year EOFY sales activity.
Clothing, footwear, and personal accessory retailing saw the largest fall in July (-0.5%) followed by department stores (-0.4%) and cafes, restaurants, and takeaway food services (0.2%).
Of the states and territories, Western Australia remains a standout with retail trade continuing to power ahead since the beginning of the year with all other states and territories seeing much weaker growth or declines.
Consumers choosing to save their cash
The data gives the first official snapshot on spending in the wake of the stage three tax cuts.
It suggests Australians are holding onto any gains in their pay packets which were sold to the electorate as providing relief for cost-of-living pressures.
The ABS figures show consumers have so far chosen to spend on necessities such as food rather than the other discretionary sectors included in the data.
This is supported by monthly credit and deposit data released today showing household deposits (savings) rose $30.8 billion in July, well up on the $18.7 billion deposited in July 2023.
National Australia Bank economists said the rise partly reflects tax returns, recent tax cuts, and government subsidies.
NAB’s head of Market Economics, Markets Tapas Strickland said the data “should do nothing to change the Reserve Bank of Australia’s assessment that financial conditions may be less tight”.
The data should also dampen criticism the federal government’s fiscal policies would ultimately fuel inflation by putting more money in the pockets of Australians.
Earlier this week, the July CPI indicator also showed price growth moderated to 3.5% on an annual basis with disinflation broadening in the month.
Energy rebates, including a one-off $250 renewable energy rebate in Tasmania in July, contributed to a 6.4% fall in electricity costs.
Photo by Marcus Wallis on Unsplash
