Australian Retail Sales fell short of expectations in June as consumer spending reduced, suggesting demand is dwindling in the face of surging inflation and rising interest rates.
Retail Sales rose 0.2% in June, the sixth straight month of growth but missed the market forecast of a 0.5% increase, data from the Australian Bureau of Statistics (ABS) showed on Thursday. The gauge booked a 0.9% rise in May.
The country’s Import Price Index climbed 4.3% QoQ in Q2 vs. 1.9% expected and 5.1% last while the Export Price Index rose by 10.1% in the reported period, missing estimates of 19.7% and 18% prior.
Earlier on, Bloomberg reported that “Australia downgraded its economic growth outlook by a half-percentage point for this fiscal year and next due to accelerating inflation, higher interest rates and a slowing global economy.”
Market reaction
In an initial reaction to the data, AUD/USD kept its range just shy of the 0.7000 mark. The pair was last seen trading at 0.6992, almost unchanged on the day.
Why AustralianRetail Sales matter to traders?
The primary gauge of Australia’s consumer spending, the Retail Sales, is released by the Australian Bureau of Statistics (ABS) about 35 days after the month ends. It accounts for approximately 80% of total retail turnover in the country and, therefore, has a significant bearing on inflation and GDP. This leading indicator has a direct correlation with inflation and growth prospects, impacting the Reserve Bank of Australia’s (RBA) interest rates decision and AUD valuation. The stats bureau uses the forward factor method, ensuring that the seasonal factors are not distorted by COVID-19 impacts.