Friday, 2 May 2008

Aussie Retail Sales Show Continued Weakness

Australian Retail Sales rose a seasonally adjusted 0.5% in March according to the abs report released today. That doesn't sound too bad until you realise that most of the gain was driven by food retailers. Why does that matter? Basically because the rise in food retailing has been driven by inflation. Retail sales are reported in nominal terms(they aren't adjusted for inflation).

As can be seen above, 5 out of 7 components turned negative in the latest month. Food and Household goods were the only components showing positive gains and as stated above the increase in food can be attributed to price inflation.

Recent data suggests that the Australian economy is slowing and that may be enough to prevent the RBA from raising rates again this cycle.