Tuesday’s data from the Australian Bureau of Statistics showed retail sales climbed 0.7 per cent in June from May, when they rose an upwardly revised 0.4 per cent.
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“Discretionary retail’s year-on-year performance is largely being buoyed by the strength of the household goods category and assisting discretionary retail to continue to outpace food categories – up 6.4 per cent compared to 3.7 per cent”.
Currency traders took heart from the figures, bidding the Australian dollar up more than one-fifth of a US cent, to US72.88¢.
In the same month, the government announced its budget targeting stimulus at small businesses in an effort to encourage economic growth and hiring.
Sales of household goods increased 2.2 per cent in June, while spending on cafes, restaurants and takeaway was strong, increasing 1.2 per cent in the month.
Economists surveyed by Bloomberg had forecast the sales would gain just 0.4 per cent over the month.
Commonwealth Bank of Australia economist Michael Blythe said the June outcome was a “step up from the relatively lacklustre pace of retail spending in recent months”.
This growth was offset by declines in clothing, footwear and personal accessory retailing, which fell 1.4 per cent in June, and department store turnover, which shrank 0.1 per cent.
Further improvement in consumer spending would help remove any remaining pressure on the central bank to lower rates again.
Spending at supermarkets dropped 0.4 per cent, while specialised food retailing climbed 1.8 per cent, seasonally-adjusted.
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Stronger than expected retail sales supports the view that the Reserve Bank of Australia will keep the official cash rate on hold later Tuesday.
