Australia's nominal retail sales likely weighed on by inflation, but real retail sales improves

Australia's apparel costs were declined on the back of weak AUD. It might also be result of intense compitition. A 0.9% qoq gain will point to solid expansion in Q3's private consumption growth.

Strong wealth effects coming from large gains in residential property prices are benefitting the country's retail spending also. Moreover, the rising numbers of tourist arrivals are also boosting retail sales, especially for the catering industry and are one factor helping to explain why retail sales have been outpacing private consumption growth.

"The nominal retail sales are likely to continue to expand at a slightly below-average rate of 0.4% mom in September, supported by solid employment growth of 2% and nominal wage growth around 2¼%", anticipates Societe Generale. 

Indeed, food and non-alcoholic beverage prices practically stagnated (0.1% qoq, and flat in seasonally adjusted terms) and those of apparel dropped outright. As regards food prices this is driven by weak agricultural prices worldwide, weaker energy and thus transportation costs as well as intense competition. 

"Retail sales growth in volume terms, meanwhile, is expected to have been solidly in line with its long-run averages, due to very low inflation", says Societe Generale.