Queensland a standout with a surprisingly strong lift in retail sales

GUEST OBSERVER

The recent lift in retail sales has sustained into October, a 0.5 percent gain in the month outstripping expectations of a more moderate 0.3 percent gain.

That follows back to back 0.6 percent monthly gains in August and September.

The detail suggests an expected dampening effect from price discounting did not materialise. Price gains accounted for all of the sales gain in Q3 and recent indicators suggested some food price increases have partially unwound in recent months.

However, food retail posted a solid 0.6 percent gain in the month, anchoring the overall result (basic food retail, i.e. supermarkets, account for about 40 percent of retail sales).

Other categories were a bit so-so with a solid but unspectacular rise for household goods retail (+0.7 percent/mth), declines for clothing (–0.4 percent) and the beleaguered department store category (–0.4 percent) but reasonable enough gains for ‘small ticket’ discretionary categories ‘other retail’ (+0.8 percent) and cafes & restaurants (+0.4 percent).

By state, Qld was a standout with a surprisingly strong 0.8 percent lift.

Overall, the result suggests consumer demand may has retained some momentum although as always disentangling retail specific effects from wider patterns of demand remains tricky.

Matthew Hassan is senior economist with Westpac.