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The Australian
a day ago
- Business
- The Australian
Nintendo Switch launch sparks surprising Aussie shopping spree
Bargain-hunting Australians and the arrival of the new Nintendo Switch unexpectedly bumped retail sales in June, but it might not be a sign of a strong national economy. Retail sales surged 1.2 per cent in June, according to the Australian Bureau of Statistics, the biggest monthly jump since November 2021 when Aussies flocked to stores post Covid lockdowns. While this smashed expectations that retail sales would grow by 0.4 per cent in June, AMP economist My Bui said the figures were quite tepid. 'The strong June result has benefited from one-off releases and promotions, which is not necessarily a sign of strength,' Ms Bui said. KPMG chief economist Brendan Rynne also said the surge in spending showed Australians were still under financial pressure. The highly anticipated launch of the Nintendo Switch 2 helped boost consumer spending. Picture: Supplied 'As cost-of-living pressures continue, households are very much vying for bargains wherever they can, with sale items now consuming a far larger portion of our spending compared to just a few years ago,' Dr Rynne said. 'This month's results show despite a lift in household savings in the first quarter of the year, families have sought to tighten their belts further to ensure they're getting the biggest bang for their buck and only buying items they absolutely need, unless it's a one-off purchase.' Mr Rynne said even factoring in the surge in retail trade on Thursday, volumes still remained sluggish over the quarter. KPMG points out that on a per capita basis, retail volumes fell 0.1 per cent in the June quarter after falling 0.4 per cent in the previous quarter, reflecting ongoing restraint in consumer spending. Compared with the same time last year, retail volumes per capita are down 0.1 per cent and are now 6.0 per cent below the June 2022 quarter peak. But zooming out, KMPG says this is still 3.2 per cent higher than the pre-pandemic level recorded in the December 2019 quarter. ABS head of business statistics Robert Ewing said the spike in retail sales was largely driven by end-of-financial year sales and the launch of the latest Nintendo video game console. A large driver of consumer spending was the new Nintendo Switch. Picture: NewsWire / John Appleyard 'Consumers are targeting sales events with a focus on value for big-ticket items like household furniture, bedding, electronic devices and TVs,' Mr Ewing said. 'Turnover for electrical and gaming retailers was lifted further by the much-anticipated launch of the Nintendo Switch 2, which delivered record sales.' Spending for the month was driven by non-food related purchasing, led by household goods retailing (up 2.3 per cent) and other retailing (up 1.9 per cent). There was also a strong bump in department store sales (up 1.9 per cent), and clothing, footwear and personal accessory retailing, which jumped 1.5 per cent. The other key spending driver was end-of-financial-year sales. Picture: NewsWire / Nicholas Eagar The ABS says this jump was due to end-of-financial-year sales of winter clothing items. Food-related spending also rose after a fall last month. While food retailing bounced back 0.9 per cent, spending in cafes, restaurants and takeaway food services fell 0.4 per cent. Oxford Economics Australia head of economic research and global trade Harry Murphy Cruise said retail trade data created the perfect trifecta for an August rate cut. 'Just as the RBA looked through the noise in monthly measures of consumer prices, the board will do the same for June's higher-than-expected retail sales print,' he said. 'It's the trend that matters, and on that front, the trend of soft retail sales, labour market weakness and easing inflation make a perfect trifecta for an August rate cut.'
Sky News AU
18-07-2025
- Business
- Sky News AU
RBA 'made a mistake' with shock interest rate hold, KPMG's Brendan Rynne declares after unemployment rate rises in June
A leading economist has torn into the Reserve Bank of Australia's recent decision to hold the cash rate after it was revealed the unemployment rate rose in June. Fresh data from the Australian Bureau of Statistics showed the unemployment rate rose 0.2 per cent to 4.3 per cent after it sat near historic lows following the pandemic. The unemployment rate is a critical piece of data for the RBA's cash rate decision, and a rise would typically mean the central bank would lower rates. After the central bank held the cash rate at 3.85 per cent, despite money markets overwhelmingly factoring in a 0.25 per cent cut, many lashed out over the shock decision. The fresh jobs data led to heightened backlash, with KPMG's chief economist Brendan Rynne joining the chorus during an appearance on Sky News Business Now. "I think they made a mistake in keeping the cash rate at 3.85 per cent," Mr Rynne said. "The risk associated with dropping that cash rate down - in terms of getting an inflation bounce compared to providing some support into the private side of the economy - we think that risk trade-off is one that should have been associated with the dropping the cash rate down to 3.6 per cent. "In the next meeting, we know that the Reserve Bank was saying it's not a matter of if rates are going to drop, it's just going to be a matter when rates drop. "We fully expect now that 25 basis points to come off at the next meetings." After holding the rate earlier this month, RBA governor Michele Bullock said the decision was due to "timing" as it awaited further data on inflation. 'The board decided to wait a few weeks to confirm that we're still on track to meet our inflation and employment objectives," she told reporters after the decision. Mr Rynne predicted annual trimmed mean inflation - the middle 70 per cent of price changes core to the RBA's decision - would come in a 2.5 per cent for the June quarter, which is in the RBA's target band. He did forecast headline inflation - which examines everything in the ABS' consumer price index - will shift as government rebates phase out. "Headline inflation will bounce over the remainder of this year, coming back up a little as the full effect of the electricity rebates and cost of living rebates start to roll off," "Notwithstanding those, we do think that that inflation is still pretty weak, particularly goods inflation, and it's going to be that further rolling off of services inflation that's going bring it down in total." If the RBA had cut rates in July, it would have been the first consecutive rate cut since the central bank delivered an emergency cut in 2020 during the onset of the pandemic. Every major bank forecasted a 25 basis point cut in July while money markets at one pointed priced in a 99 per cent chance of a cut. If the RBA is to cut rates in August, it will be the third rate cut this year and will bring the cash rate down to 3.6 per cent.
Sky News AU
17-07-2025
- Business
- Sky News AU
August interest rate cut all but locked in after unemployment rises to 4.3 per cent in June, surpassing market expectations
The unemployment rate came in higher than expected for June, boosting hopes for an August rate cut after the Reserve Bank of Australia surprisingly held rates in July. Fresh data from the Australian Bureau of Statistics showed the unemployment rate rose 0.2 per cent to 4.3 per cent after it sat near historic lows following the pandemic. Employment rose by 2,000 people this month with part-time employment up 40,000, which was offset by a 38,000 person decline in full-time employment. The unemployment rate is a critical piece of data for the RBA's cash rate decision. This jump has boosted chances of a rate cut when the central bank next meets in August, with money markets now forecasting an 87 per cent chance of a cut, up from a 77 per cent chance before the call. KPMG's chief economist Brendan Rynne said the latest data showed the private market continued to struggle with poor business conditions in Australia and heaped pressure on the central bank to cut rates. 'While quarterly inflation data is still a week or so away, today's data will reinforce the weakness that is continuing within the private side of the Australian economy, and even by itself should be enough for the RBA to drop the cash rate at its next meeting,' Mr Rynne said. Similarly, Capital Economics senior APAC economist Abhijit Surya called into question the RBA's recent rate hold after the new unemployment data was released. 'The sharp rise in unemployment in June makes the RBA's decision to leave rates on hold earlier this month look like a policy error,' Mr Surya said. 'We're increasingly convinced that the incoming data flow will prompt the Bank to cut rates further than most are currently anticipating.' Sky News' Business Editor Ross Greenwood said the employment slump comes as public sector employment booms over the past few years, with Labor now wanting the private sector to pick up the slack. 'If the government starts to drop out of employing public servants and employing other people associated with government policy - childcare, age care, the NDIS - then you start to see that the private sector is not fast enough in picking up those employees,' Greenwood said. 'I get a sense that that's what we're seeing right now.' Greenwood said the jump in June was, in part, due to many part-time and full-time jobs going as work required for the recent election in May was phased out. 'The Federal Election sees significant numbers of people employed, not just through the Australian Electoral Commission, but through the political parties themselves,' he said. Monthly hours worked fell about 1.3 per cent as there was a 0.4 per cent drop in the number of full time employees. ABS head of labour statistics Sean Crick said the unemployment jump was driven by a 34,000 increase in the number of unemployed people. If the RBA is to cut rates in August, it will be the third rate cut this year and will bring the cash rate down to 3.6 per cent.
The Guardian
25-06-2025
- Business
- The Guardian
Falling inflation rate boosts chances of RBA interest rate cut and relief for mortgage holders
Australia's inflation rate has eased again, bolstering expectations the Reserve Bank will lower the cash rate next month and bring further reprieve for mortgage holders. The headline inflation rate was 2.1% in the 12 months to May, down sharply on the previous month's figure of 2.4%, according to consumer price index figures released on Wednesday. KPMG chief economist Brendan Rynne said there was a 'continued pattern of deflation across the Australian economy'. 'This could provide comfort to the Reserve Bank at its next meeting, knowing that any cut to the cash rate will occur in a stable inflationary environment,' Rynne said. Sign up for Guardian Australia's breaking news email Krishna Bhimavarapu, economist at State Street Global Advisors, said: 'We are convinced that the RBA needs to cut in July to safeguard growth as inflation is clearly out of their way now.' While the monthly result can be volatile and is viewed as less authoritative than quarterly figures, the steep fall has pushed inflation towards the bottom of the RBA's 2-3% target range. The RBA's preferred CPI measure, the 'trimmed mean' or underlying inflation rate that strips out volatile items and various government subsidies, decreased to 2.4% from 2.8%. Markets upped their bets on a rate cut after the data was released, with markets now indicating near consensus support for a quarter point cut on 8 July. In total, traders expect three more rate cuts this year. While further rate cuts will be welcomed by mortgage holders, any further reduction in borrowing rates is expected to fuel another surge in property prices, making homes more unaffordable for prospective buyers. Economists at the major banks still believe the RBA will wait until August to cut. ANZ economist Madeline Dunk said the July meeting would be a 'close call'. 'It's going to be a pretty tough decision and it really depends on how concerned the RBA is about what's been happening globally,' Dunk said. She said the disruption caused by the initial US tariff announcements had faded, giving economic activity a chance to stabilise.
Sky News AU
25-06-2025
- Business
- Sky News AU
July interest rate cut all but locked in after trimmed mean inflation plunges to 2.4 per cent in the 12 months to May
Inflation has fallen in the 12 months to May, effectively cementing an interest rate cut when the Reserve Bank of Australia next meets. New data from the Australian Bureau of Statistics showed headline inflation fell from 2.4 per cent to 2.1 per cent and exceeded expectations. Trimmed mean inflation – the middle 70 per cent of price changes core to the RBA's upcoming interest rate call – fell from 2.8 per cent to 2.4 per cent in May. This marks the lowest annual trimmed mean inflation since November 2021. Money markets were expecting headline inflation, which includes all items in the ABS' consumer price index, to come in at 2.3 per cent. The latest inflation data comes ahead of the central bank's upcoming cash rate call where it is tipped to deliver mortgage holders their third rate cut of the year. Prior to the release of Wednesday's inflation data, money markets were factoring in an 81.4 per cent chance of a cut. After the release of the data, the chances of a rate cut has grown to 85 per cent, while the chance of no cut has fall from 18 to 15 per cent. KPMG's chief economist Brendan Rynne said the latest data could provide comfort to the RBA at its next meeting. "From KPMG's perspective, a 0.25 per cent cut is warranted given the continued weakness in the private sector of the Australian economy," Mr Rynne said. "On top of that any increase in demand that comes about from a further drop in interest rates is unlikely to stoke the inflation genie in an unhelpful way." A rate cut in July will be the third from the RBA after it slashed rates in February and May. This followed the central bank holding the cash rate at 4.35 per cent for almost 18 months to stamp out post-pandemic inflation. The largest contributors to the annual price changes in May was food and non-alcoholic beverages (up 2.9 per cent), followed by housing (up two per cent) and alcohol and tobacco (up 5.9 per cent). The ABS' head of price statistics, Michelle Marquardt, noted that non-alcoholic beverages surged in May due to global factors impacting supply. 'Non-alcoholic beverage prices remain high, with coffee, tea and cocoa prices up by 8.3 per cent over the past 12 months,' Ms Marquardt said. 'Higher prices for coffee drove the rise with adverse weather conditions impacting major overseas coffee bean-growing areas.' Rents were up 4.5 per cent in the 12 months to May, marking the lowest annual growth in rental prices since December 2022, while new dwelling prices rose 0.8 per cent. Electricity prices fell 5.9 per cent in the 12 months to May. This was lower than the 6.5 per cent plunge electricity prices took in the 12 months to April due to the timing of government rebates. 'In Victoria, the impact of these rebates was lower in May than April due to the timing of payments,' Ms Marquardt said. 'Without the Commonwealth and State government rebates, electricity prices would have risen 2.0 per cent in the 12 months to May.'
