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.