By James Glynn
SYDNEY--Australian retail sales growth was twice as strong as strong as expected by economists in May, adding fuel to arguments that the Reserve Bank of Australia could raise interest rates as early as August.
Retail turnover rose 0.6% in May, the Australian Bureau of Statistics said Wednesday. Economists had expected a rise of 0.3%.
This increase followed a 0.1% rise in April and a 0.4% fall in March.
Retail sales was listed among a number of data sets last week by the Reserve Bank of Australia as figures that would feed directly into decision making at the central bank's next policy meeting in early August.
The strength in consumer spending will have surprised the RBA, which has been highlighting a recent cooling in consumption as a reason for a broader slowdown in the economy.
The retail-sales data comes amid heightened concerns about stubborn inflation risks, with the May consumer-price index indicator rising 4.0%, well above the 3.6% increase expected by economists, and adding to a string of strong inflation reports since the start of the year.
"Retail turnover was boosted this month by watchful shoppers taking advantage of early end-of-financial year promotions and sales events," said Robert Ewing, ABS head of business statistics.
"Many retailers started end-of-financial year sales early, offering larger discounts than usual and noted that shoppers remain price-sensitive in response to persistent cost-of-living pressures," Ewing added.
Despite the seasonally adjusted rise, underlying spending remains stagnant with retail turnover flat in trend terms. Compared with May 2023, retail sales was only up 1.5% in trend terms, the data showed.
Turnover in most nonfood-related industries rose in May, as did clothing, footwear and personal-accessory retailing, which bounced back after two consecutive declines in April and March, the ABS said.
Write to James Glynn at james.glynn@wsj.com
(END) Dow Jones Newswires
07-02-24 2217ET
