Consumers are spending more after retailers brought forward their end-of-financial-year sales and discount promotions.Economists say while a rate hike from the RBA in August seems likely, the jump in retail spending is not the main contributing factor.
Most of the increase was in clothing and footwear, with customers being enticed to spend their cash with retailers offering big discounts and longer — or more frequent — sales. "When we take that step back, it's quite clear that the retail sector overall remains quite weak, and that many households need these discounts and these incentives in order to go out and spend like they used to," Indeed economist Callam Pickering told The Business.As spending flatlines, discounting doesn't appear to have the same effect it used to, sparking warnings of looming retail collapses.
Although discounts may have benefited customers, it isn't enough to relieve the pressure facing retailers, who are some of the country's largest employers. Comparatively, the price increase recorded for clothing and footwear over the year to May was among the lowest, at 2.8 per cent. Even so, he said that consumers had already pared back their spending substantially on discretionary, or non-essential, items.