Analysts at ANZ Bank have stated that Australia’s retail sales for July came in stronger than expected, with a month-on-month growth of 0.5%. However, this is still insufficient to offset the 0.8% decline seen in June.
The underlying trend in retail sales, as well as the expenditure data observed by the bank, indicates that households are significantly cutting back on spending.
Consumer confidence is also quite fragile, and the end of fixed-rate periods means more household budgets are being squeezed by higher interest rates and inflation.
The bank believes that Australian households will continue to tighten their expenditure throughout 2023.
However, with inflation slowing down and real household incomes turning positive, there is some potential for upward movement in spending in 2024.
