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By Ambar Warrick
Investing.com– Australian retail sales rose more than expected in July as elevated inflation and strength in the jobs market kept consumers spending despite higher borrowing costs.
Preliminary data from the Australian Bureau of Statistics (ABS) showed on Monday that retail trade in Australia from the prior month, far more than expectations for a rise of 0.3%. Retail trade jumped at an annual rate of 16.5%.
Shopping in department stores was the biggest contributor to the jump, the ABS said, while spending on clothing, footwear, and accessories continued to grow.
But investors spent less on household goods, as rising inflation made them hesitate in making large purchases, such as new appliances. Spending on household goods is at a six-month low in the country.
July’s reading also shows that strength in Australian retailers is likely to extend into the third quarter, after rising steadily . The trend gives the more confidence in raising interest rates, given that consumer spending has so far managed to persevere through elevated inflation.
The central bank raised rates by another to 1.85% earlier this month, and signaled that more tightening was likely as reaches 30-year highs.
Monday’s positive figures were likely also spurred by strength in Australia’s , with unemployment at a 48-year low in the country. Still, average growth in has largely lagged behind inflation this year.
The showed little reaction to the data, trading down 0.5% at 0.6858 by 21:49 ET(01:49 GMT). The currency and most of its Asia-Pacific peers were dented by strength in the U.S. dollar following a hawkish message from Federal Reserve Chair Jerome Powell last week.
The ABS is set to release more comprehensive data on retail spending on Sept. 5.
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