Retail rebound raises rate risk as economists scrutinise cash splash
A surprise retail rebound in August has economists debating whether fiscal measures or warm weather drove the surge, with concerns rising over rates.
The official statistics bureau has attributed a surprise bump in August retail spending to unseasonably warm weather and Father’s Day shopping. But some economists believe there’s more to the story.
One possible explanation for the retail rebound is that the government’s stage three tax cuts and energy rebates are beginning to flow into household budgets, supporting spending. This complication could present a challenge for both the Reserve Bank and the federal government.
“It’s hard to envisage rate cuts with spending holding up like this,” warned IFM Investors chief economist Alex Joiner, reflecting concerns that stronger spending might undermine efforts to curb inflation.
Economists, who were on average expecting an 0.4% lift in retail turnover for August, were surprised by a 0.7% uptick, according to data released by the Australian Bureau of Statistics on Tuesday. July’s figures were also revised up to 0.1%, from an initially flat result.
