Post election tax offsets may boost hurting retailers: Deloitte

Retailers faced yet another period of weak demand and declining retail spending over the March quarter of 2019, according to Deloitte Access Economics’ latest quarterly Retail Forecasts report.

The report found however, it may not be all doom and gloom for the sector, with some relief expected in the second half of the year in the form of increased tax offsets.

Real retail turnover growth is expected to slow from 2.2% in 2018 to just 1.5% in 2019, before picking up in 2020 to 2.9%

Household finances have come under pressure from stagnant wage growth and declining wealth, despite decreased unemployment numbers.

This has hurt consumer sentiment and weighed on willingness to spend.

Deloitte Access Economics partner and Retail Forecasts principal author, David Rumbens, said, “March quarter retail data confirmed our view that consumers are just not willing to spend as they once were. People are pulling back on spending as household finances remain under pressure from stagnant wage growth and declining wealth.

“A deteriorating labour market, inflation below the target range, weak consumption, and falling house prices were enough to prompt monetary easing by the Reserve Bank of Australia for the first time in nearly three years, and lower rates will leave some much needed cash in the pockets of Australia’s highly indebted households."

He added that over half of all tax refunds are completed in the September quarter, and just under another 25% in December.

“This bodes well for a surge in spending in the September quarter, rising around 1.3% over the quarter, and provide the boost retailers have been craving,” Rumbens concluded.