The NAB’s data mapping points to a slight drop in retail sales in August and a flat result for ABS measure last month, despite the ABS measure recording a very strong 1.3 per cent gain in July.
It remains unclear why the NAB data diverged so significantly from the ABS last month.
Price pressures continue to bite, which has seen the Reserve Bank of Australia hike rates 50 bps at each of the last four meetings, to 2.35 per cent (from just 0.1 per cent at the start of the year).
The NAB analysts said they are predicting a further two 25-bp rises before the end of 2022 that will likely dent consumer spending in late 2022 and early 2023, although the resilience of consumers continues to surprise, at least in the data so far.
NAB chief economist, Alan Oster said the NAB’s August index follows a departure from its data and the official ABS measure last month.
“While our high-frequency weekly consumption data shows retail spending tracking sideways (although hospitality continues to outperform) the ABS data has outperformed our expectations. Whether this continues remains to be seen,” he said.
“The August NAB Monthly Business Survey recorded more encouraging data for the retail sector — trend conditions remain at a very elevated +26.6. Product price growth remains at record levels — the survey measure of retail final product prices rose 3.3 per cent at a quarterly rate in August, unchanged from June.
“It remains our view that central bank rate hikes in response to high inflation will see GDP growth moderate in 2023, to around 1.75 per cent y/y. While retail spending has remained robust through the pandemic, higher official interest rates will eat into disposable income and are very likely to lead to reduced spending. While this is not likely to bite until late 2022, 2023 is likely to be a slower year for consumers and therefore the retail sector.”
