Australian retail sales rose 4.8% in June 2026, compared with the same month last year. While a slight slowdown in growth, the weakness was very specific to department stores and discount department stores. Elsewhere, household goods sales strengthened and café & restaurant sales remain above trend. Retail demand remains strong and makes higher interest rates a risk. We expect the RBA will need to see retail sales growth of less than 4% in order to take a neutral stance. The drivers of a slowdown in spending will take a few more months to work through, particularly in the household goods categories.

Australian retail sales rose 4.8% year-on-year in February 2026. Growth has softened a little, reflecting soft growth in food & liquor and a slowdown in household goods. Growth in dining out and online retail remain above trend, suggesting consumers took the February rate hike in their stride. The starting point for the slowdown in retail sales is reasonably strong and we may see March growth at 3%-4% overall following higher petrol prices. A return to sales growth near 4% is our view and more consistent with a neutral cash rate backdrop.