Australian retail sales rose 6.6% in July 2026, well above long-term trends of 4.9%. The strength may come as a surprise given broad expectations of a slowdown. However, it was a warm and dry month. Promotions and the FIFA World Cup may have helped sales. The strength was most pronounced in cafes, restaurants and takeaway food. Once again, retail spending is too strong for the RBA’s liking, adding risks to more rate hikes. Moreover, the slowdown in sales in household goods will take time and is more likely from September 2026 onwards. A broader slowdown linked to a negative wealth effect will happen much closer to Christmas and also be evident in 2027.