There is no gilding the lily on the latest retail sales data for August which showed a much weaker than expected growth rate of just 0.1% when the market had been expecting to print 0.4%.
A rise of 0.1% is still better than no rise at all but what this data shows, both in absolute terms and in individual sales categories, is that Australian consumers are hunkered down and not spending unless they need too.
Over the past six months only food retailing has grown in each of those months. Equally, after having shown solid growth in the nine months to March this year the discretionary spending associated with cafes, restaurants and takeaway joints have dropped from an average monthly growth rate of 1.1% to just 0.3% average in the five months since then.
It suggests that consumers are re-prioritising their spending towards life’s necessities and away from life’s luxuries.
The overall growth rate of retail sales has slowed materially as well averaging just 0.1% in seasonally adjusted terms in the last six months.
It all adds up to the consumer, faced with uncertainty on so many fronts, is being very cautious with their spending. It is also a picture of an economy that might soon require monetary stimulus from the Reserve Bank. Stimulus the RBA is clearly reluctant to give.