Australian inflation for the June 2022 quarter was 6.1% and retail inflation was 5%. Packaged grocery inflation was at its highest in more than 30 years and electronics, a category that is typically deflationary, showed inflation of 4%. The good news for retailers is that the inflation remains within a sweet spot with nominal sales growth supported by price rises and a very limited volume response. Expect more retail price inflation over the next six months.

Australian inflation has accelerated significantly with retail inflation accelerating by 120bp over the past three months. The most notable step-up in prices is in supermarkets, electronics and sporting goods. The categories that are lagging are liquor, clothing and footwear. We expect inflation to rise further in calendar 2022 given the input cost pressures that are working their way through the value-chain. The question is whether inflation is within a sweet spot, providing a boost to revenue greater than the volume decline. At current levels, we think inflation is a net positive as the rate of inflation is only slightly ahead of wage growth.

Australian inflation has accelerated significantly with retail inflation accelerating by 120bp over the past three months. The most notable step-up in prices is in supermarkets, electronics and sporting goods. The categories that are lagging are liquor, clothing and footwear. We expect inflation to rise further in calendar 2022 given the input cost pressures that are working their way through the value-chain. The question is whether inflation is within a sweet spot, providing a boost to revenue greater than the volume decline. At current levels, we think inflation is a net positive as the rate of inflation is only slightly ahead of wage growth.