RETAIL SALES FLAT IN JULY
Stagnant wages, rising utility bills weigh on household budgets
AUSTRALIAN retail sales braked in July as consumers, burdened by stagnant wages and rising utility bills, sharply cut back their spending at department stores and on household goods.
Australian Bureau of Statistics’ data published yesterday showed retail sales were flat in July, upsetting expectations for a 0.3 per cent increase after a solid 1.8 per cent gain in sales the June quarter.
The Reserve Bank of Australia (RBA) has long feared ballooning debt in the red-hot property sector was pinching consumers’ ability to spend elsewhere in the economy.
“This (spending momentum) is unlikely to continue as the wealth effects flowing from property price gains in Sydney and Melbourne slow,” said Shane Oliver, chief economist at AMP Capital.
“Rapid power cost increases and high debt are also not helping. All of which is driving low consumer confidence.”
Gas and electricity prices rose by around 20 per cent on July 1, weighing on household budgets at a time when private debt has skyrocketed to 190 per cent of disposable income.
Australians are also collectively taking a pay cut, according to analysis by Morgan Stanley, which shows average non-farm compensation shrank by 0.3 per cent in the June quarter.
Many economists believe gross domestic product growth will probably fall short of RBA’s upbeat forecast of around three per cent a year over the next two years. Reuters