Australia: Retail sales see flat July - Westpac

Simon Murray, Economist, at Westpac, notes that Australian retail sales were flat in July, below market expectations for a 0.3% gain.

Key Quotes

“The lacklustre start to Q3 follows a solid 1.3% bounce in Q2, with sales having been choppy around a modest trend through the past year.”

“In relation, the July retail sales print is the first read post the extension of GST to low value imported goods. The tax change has the potential to change the competitive dynamics in the Australian market between online sellers and traditional brick and mortar retailers.”

“It is too early to draw conclusions on the effect of the tax change but we are eagerly awaiting the Q3 nominal and real breakdown. The degree to which the GST extension attenuates price discounting could reduce the drag on retail inflation and impact sales volumes. However, it is unlikely to sizably shift the trend given the over-arching constraint on consumption of subdued income growth.”