Retail sales figures have been lacklustre for the past couple of years despite a declining savings rate. Economists have explained the low growth rate as a result of record household debt and a low rate of income growth. There is also the issue of effect of price deflation. Despite this environment, sales figures have exceeded market expectations in recent months. However, the latest sales figures have not continued this trend.
According to the latest ABS figures, total retail sales missed expectations in July as sales stood still over the month on a seasonally-adjusted basis. On a year-on-year basis, sales grew by 2.9%, up from June’s revised annual rate of 2.8%.
The worse-than-expected result followed an upwardly-revised growth rate of 0.4% in May and June. The median market expectation was for a +0.3% increase but local bond yields was largely unaffected while the local currency went a little higher. The yield on 3-year ACGBs slipped by 1bp to 1.99% while 10-year and 20-year ACGBs remained unchanged at 2.52% and 2.86% respectively. The Aussie dollar finished the day around 0.2 US cents higher at 72.10 US cents. However, prices of cash futures contracts moved to imply a lower chance of a rate rise in the latter months of 2019.