The Australian retail sector imports a significant portion of products from offshore, particularly in non-food categories. In most cases, these goods are purchased in a foreign currency, which means currency volatility can impact the cost of goods and retail profits. In Issue 9 of Price Watch, we analyse the impact that changes in the Australian dollar against the US dollar (AUD/USD) can have on retail prices and profitability. A fall in the AUD/USD typically impacts retail prices with a six-month lag.

Premier Investments provided a trading update to say that its first 12 weeks of FY23e has seen sales up 43%. These growth rates lap lockdowns from last year and are distorted. Nevertheless, underlying demand is strong as consumers have ramped up fashion spending. We expect sales growth to slow to very low single-digit from November onwards and sales are likely to decline in 2023.