Australian Retail Sales Stagnate as Elevated Rates Take Toll

(Bloomberg) — Australian retail sales growth stalled in July as elevated interest rates force households to hunker down on discretionary spending.
Sales were unchanged from the prior month, versus economists’ estimate of a 0.3% gain, data from the Australian Bureau of Statistics showed Friday. The result snapped a three-month stretch of expansion.
The Reserve Bank has held rates at a 12-year high of 4.35% for the past nine months to try to rein in inflation, while highlighting that the outlook for household spending remains a key uncertainty. Consumption accounts for more than half of gross domestic product. 
“After rises in the past two months boosted by mid-year sales activity, the higher level of retail turnover was maintained,” Ben Dorber, ABS head of retail statistics, said in a statement. “Western Australia continues to be the standout of the states and territories, having risen for the seventh consecutive month.”
WA is the center of Australia’s resource economy that’s enjoyed a windfall from high commodity prices.
The RBA next meets on Sept. 23-24, when economists and markets anticipate it will leave interest rates unchanged again.
Money markets are wagering about a 70% chance of a rate cut in December. That’s come down from previously fully pricing an easing and reflects stubbornly strong inflation and the RBA’s recent hawkish rhetoric.
Friday’s retail data also showed:
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