CE and appliance retailers along with the likes of Bunnings are facing a double edge sword, on one hand sales have come back in September, resulting in analysts now tipping a rate rise on Melbourne Cup day, because of the lift in revenues by retailers who are witnessing a significant slump in sales across the board.
iPhone 15 sales that are booming at CE retailers while hardware, gardening, audio, and clothing are among the in-demand products.
Earlier today the Australian Bureau of Statistics unexpectedly reported a strong 0.9 per cent lift in monthly trade to $35.9bn – up from the 0.3 per cent growth recorded in August.
According to economists this is the evidence that the Reserve Bank will use to hike interest rates for a 13th next week.
UBS chief economist George Tharenou said the latest figures “reinforces our view the economy is surprisingly resilient and adds to the case to hike” on November 7.
“Indeed, if this continues, it adds to the risk of an additional RBA hike” in February he said.
A rate rise could also be fuelled in part by Black Friday sales.
For retailers fighting to grow sales the prospect of further rate rises is daunting and a move that will create downward pressure on sales.
Last month there was a 1.7 per cent jump in department store sales, a 1.5 per cent increase in households goods retailing, and a 1 per cent rise in food retailing.
ABS head of retail statistics Ben Dorber said in addition to the impact of the unseasonably warm start to spring, the release of a new iPhone model and a Queensland rebate for the purchase of energy-efficient appliances also boosted the final figure.
But Mr Dorber said the underlying growth in retail turnover remained historically depressed.
“Retail turnover in trend terms is up only 1.5 per cent compared to September 2022 – the smallest trend growth over 12 months in the history of the series,” he said.
Analysts now believe that retail volumes – that is, after accounting for inflation – were 0.2-0.3 per cent high in the three months to September following three quarters of declines.
ANZ economist Madeline Dunk said, “the fact that it has taken ten months to get back to this level highlights the underlying weakness in the retail sector right now, particularly given the rapid pace of population growth.”
Australian Retailers Association chief executive Paul Zahra said the bumper September figures would give retailers “a cautious bit of optimism heading into these vital trading months.”
Mr Zahra called on the RBA to hold fire on another rate hike, saying the decision in a week’s time “will be pivotal to the success of retailers during the most important trading time of the year.”
