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  • Writer's pictureFlow Australia

Softer retail sales expected as cost pressures mount

The Reserve Bank is set to scrutinise the latest retail trade figures as it continues its battle to wrestle inflation back to its target rate.

Retail trade figures are likely to highlight muted spending as the high cost of living, interest rate hikes and personal income tax growth ate into bank balances.

The October retail trade data, scheduled for Tuesday from the Australian Bureau of Statistics, follow a strong month for September.

While the 0.9 per cent lift in September was much higher than anticipated, it was largely driven by one-off influences such as the release of a new iPhone model, government policies and unseasonably warm weather.

St George senior economist Pat Bustamante said retail turnover was likely to slow to 0.2 per cent in October to reflect ongoing financial pressures.

"Looking further ahead, we are also expecting a strong November outcome as households bring forward end-of-year spending to take full advantage of Black Friday sales," he said.

Consumption habits remain a focus for the Reserve Bank as it seeks to get inflation under control by lifting interest rates and stifling demand.

The consumer price index, which details price changes across a basket of consumer goods and services, will be released by the Australian Bureau of Statistics on Wednesday.

The 25 basis point increase to the official cash rate to 4.35 per cent earlier this month was the 13th in the RBA's fight against inflation.

Consumers have also reported feeling worried about the state of the economy and their finances as captured in regular confidence surveys.

The survey of consumer sentiment from Roy Morgan and ANZ improved a little last week, increasing two points, as many shoppers geared up to take advantage of the Black Friday sales.

ANZ senior economist Adelaide Timbrell highlighted the 7.1 point jump in the "time to buy a major household item" subindex.

"The subindex climbed to its highest since the first week of February as buying sentiment remained upbeat over the week running into the Black Friday sales weekend," she said. 

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