Are you still out there spending up big?
Well if so, you're in good company.
Despite the rising cost of living and higher interest rates the latest figures show retail sales rose 0.6% month on month in August, following on from the punchy 1.3% month-on-month gain in July.
The solid rise signals the consumer remains resilient to monetary tightening seen to date, and to elevated inflation, even as much of the growth in values is alongside elevated price rises.
Interestingly we're happy spending our savings pampering ourselves and on take away food
While spending remains well above pre-pandemic in all industries, growth in August driven by food-related spending (food retailing +1.1% month on month and cafes/restaurants +1.3% month on month), while non-food retailing was mixed with household goods (+2.6% month on month) and department stores (2.8% month on month) strong, but weakness being seen in clothing (-2.3% month on month) and other retailing (-2.5% month on month).
Taylor Nugent, Markets Economist from NAB explained:
"Retail sales growth in the month was driven by food-related categories.
Cafes, restaurants and takeaway food services were up 1.3% and food retailing was 1.1%.
The monthly inflation indicator released tomorrow will capture price rises in groceries in both July and August, and record price rises in meals and takeaway in the August print.
Robust growth in nominal spend, plus the tailwind from the unwind of subsidy programs in Melbourne and Sydney, suggests inflation in these key domestic-sensitive inflation components may have quickened further from Quarter 2."
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Department stores rose 2.8% to a new high, while household goods retailing arrested the declining trend over the past three months, up 2.6%.
Other retailing (which includes online-only retailers) was down 2.5% for its fifth consecutive decline.
Clothing, footwear and personal accessory retailing dropped 2.3%.
The much vaunted rebalance away from goods has also not occurred on the whole, while services spending looks to be now matching elevated goods demand.
As for the nation's state capitals, Mr Nugent said:
"By state, sales rose in Tasmania (2.2%), the ACT (1.9%), New South Wales (1.5%), South Australia (1.3%), and Victoria (0.1%).
Sales declined in Western Australia (0.2%) and Queensland (-0.1%).
Growth in Queensland has been broadly flat since March, and the change since prior to the pandemic is now around the same as the for the country as a whole."
The RBA has noted it is paying close attention to households as they respond to the hit to real incomes and to the rapid rise in interest rates.
Mr Nugent's insights are:
"While it may be too early to see a direct cash flow hit from monetary tightening seen so far, today’s data suggests low levels of consumer confidence (which may be in reaction to higher rates and high inflation) are so far not translating into reduced spending.
Overall, that supports our expectation for the RBA to tighten further and NAB continues to expect a 50bp rate rise from the RBA on Tuesday before a step down to a 25bp increment."
Source of charts and commentary: Taylor Nugent, Markets Economist from NAB