“The tax cuts that came into effect in July, were said to be expected to boost household incomes and add to spending in the second half of the year yeilding A$40 a month to a person on average weekly earnings of A$56,000. However this amount almost exactly matches the May interest-rate increase on an average mortgage of $250,000. With better retailing results now announced during the same period, its clear that the consumers who dont have high mortgages were able to increase spending. This increased consumer spending coupled with the current higher inflation figure brings about the prospect of even more interest rate hikes. The disturbing factor is that the higher inflation figure is mostly effected by higher oil prices and cyclone related bannana prices, (two external factors that wont be influenced by our reserve bank’s monetary policy weapon). The Australian Bureau of statistics last week released data that shows Australia’s retail sales rose 0.6% in July from the previous month, beating expectations of a 0.5% rise and following June’s hefty 0.9% increase. Employers hired 50,000 extra workers in July and $36.7 billion of tax cuts took effect. The Australian economy, now in its 15th year of expansion, grew 3.1% on the previous year. The inflation rate was 4% in the second quarter, the first time in more than three years it has exceeded the Reserve Bank’s target band of 2-3%. Recently announced retailing results include:-* Woolworths Ltd. Sales up 20% in the year to June 30.* The Reject Shop Sales up 17% in the year to June 30.* JB Hi-Fi Ltd. Second half profit up 42% on sales of flat-screen TVs and computer games.”
Stats show that retailing is hanging in.
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