Quick Bite | Australian consumer strength mounts further pressure on the RBA

Australian retail sales in September 2023 increased 0.9% from August, materially above market consensus at +0.3%. The rise represents the biggest monthly increase since January, however, subdued spending throughout 2023 means that underlying growth in retail turnover remains historically low. Compared to September 2022, seasonally adjusted sales were up 2.0%, which appears to be showing potential signs of a bottoming.

There was no specific major driver behind the strength in September, but the Australian Bureau of Statistics (ABS) cited a range of factors including a warmer than usual start to spring, the launch of the new iPhone model and the Climate Smart Energy Savers Rebate program in Queensland.

Source: Australian Bureau of Statistics, 2023 

What does this mean for markets?

While the impact of interest rate rises takes time to flow through to the real economy, last week’s hotter-than-expected inflation number, coupled with September’s better-than-expected retail data puts more pressure on the Reserve Bank of Australia to increase rates further when they meet next week on the 7th of November.

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