Australian retail sales higher than expected in July as labor market remains strong

The Australian National Bureau of Statistics (ABS) reported today that retail sales rose sharply in July. This is because a strong labor market is a factor encouraging consumers to continue spending despite rising inflation and higher borrowing costs

Australian retail sales rose 0.3% month-on-month in July, well above market expectations and 16.5% higher year-on-year.

According to ABS, the increase in retail sales was mainly driven by in-store shopping. At the same time, spending on clothing, shoes, and accessories continues to rise.

Consumers are spending less money on household appliances due to rising inflation and are reluctant to spend much money, e.g. on new appliances. Household spending fell to a 6-month low.

In early August, the Reserve Bank of Australia raised interest rates by 0.50% to 1.85% and signaled a further rate hike.

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