Australian retail sales rebounded surprisingly strongly in July, suggesting the nation's heavily indebted households retain spending power even after the Reserve Bank's 12 interest-rate increases.
Sales advanced 0.5% from a month earlier, when they declined 0.8% and compared with estimates for a 0.3% rise, Australian Bureau of Statistics data showed Monday. The jump was driven by non-food industries.
The strength in household spending jars with downbeat consumer sentiment and raises questions over whether the RBA needs to do more to curb demand and cool prices. Policymakers will now turn their attention to monthly inflation data on Wednesday to further inform their thinking ahead of next week's September rate meeting.
The rate-sensitive three-year government bond yield edged higher and the Australian dollar held onto earlier gains following the data.
The RBA left the cash rate at 4.1% earlier this month to assess the impact of its tightening cycle that began in May 2022, while keeping the door ajar to further tightening. Retail sales are an important factor in rate decisions given that consumption accounts for roughly 60% of gross domestic product.
Source : Bloomberg
