Data from the Australian Bureau of Statistics showed retail sales rose 0.9% in April to a record 33.9 billion Australian dollars ($24.11 billion) on Friday, matching forecasts. analysts.
Sales increased by 9.6% over the previous year, although much of this increase was due to higher prices.
“High food prices have combined with increased household spending during the April holiday period as more people travel, eat out and hold family gatherings,” the director of quarterly statistics said. the whole economy of the office, Ben James.
Decision-makers hope that households will dip into their savings to continue consuming, even if real incomes decline.
Australians have accumulated around A$272 billion in extra savings during the pandemic and are sitting on bank deposits worth a record A$1.26 trillion.
That’s one reason the Reserve Bank of Australia (RBA) felt confident enough to raise interest rates by a quarter of a percentage point to 0.35% this month, the first rise since 2010, and to signal further increases to come.
Markets are betting that the RBA will raise interest rates to 0.60% in June and reach as high as 2.5% by the end of the year.
If they’re right, it will be one of the most aggressive tightening cycles on record and add more than A$600 a month in payments to the average mortgage.
This would happen as the cost of everything from health care to gasoline, education and building homes is rising. Consumer price inflation is already at a 20-year peak of 5.1% and is expected to reach 6% this year.
Due to rising energy costs around the world, Australia’s electricity regulator has just approved price increases ranging from 9% to 18%, ending an unusual period of subdued electricity inflation .
With inflation well above wages, households are feeling the effects of the crisis and consumer surveys show confidence is at its lowest level since the pandemic began shutting down cities.
All of this is bad news for a Labor government that has just won power after nine years in opposition.
Treasurer Jim Chalmers acknowledged the “extreme price pressures” but ruled out extending a fuel tax cut as the budget was deep in the red.
(1 $ = 1.4063 Australian dollars)
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