Confidence among consumers may be low but it hasn’t stopped them venturing to the shops and spending at record levels.
Retail trade grew by a larger than expected 0.9 per cent in May to a record $34.2 billion, the Australian Bureau of Statistics says.
This was the fifth consecutive monthly rise in retail turnover.
“There was growth across five of the six retail industries in May as spending remained resilient,” ABS director of quarterly economy wide statistics Ben Dorber said on Wednesday.
“Higher prices added to the growth in retail turnover in May. This was most evident in cafes, restaurants and takeaway food services and food retailing.”
Economists had expected a more subdued result given the figures coincided with the Reserve Bank’s first interest rate rise in more than a decade of 25 basis points.
The central bank followed up with a 50 basis point rise in June, the largest increase since February 2000, which triggered a near-eight per cent slump in confidence that has only partially recovered.
Economists expect a further 50 point increase at next week’s July board meeting and potentially another one in August if inflation for the June quarter proves strong.
In affirming Australia’s triple-A credit rating on Tuesday, Moody’s Investors Service said it expected a significant increase in interest rates from the RBA, leading to a moderation of inflationary pressures in 2023.
Moody’s expects Australia’s economy will grow at 3.2 per cent in 2022, reflecting solid consumer demand growth as households draw down their pandemic savings, and a positive employment outlook.
“In 2023, GDP growth will moderate to 2.6 per cent as tighter monetary policy leads to a modest slowing of consumer demand,” the global rating agency said.