Good News For Retail Industry, Inflation Down, Claims A$ Set To Climb

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Retailers have got two lots of good news today inflation has slowed sharply to 4.1 per cent in the year to the December quarter, from 5.4 per cent in September, and a major analyst group has predicted that the Australian dollar is set to “roar”.

The good news comes ahead of the Reserve Bank’s first board meeting of the year next week when a decision on rate cuts or rises will be made. Most analysts are tipping that rates will stay as is.

Consumer prices lifted just 0.6 per cent through the final three months of 2023 – the smallest increase in nearly four years – or half the 1.2 per cent in the September quarter, the Australian Bureau of Statistics data revealed.

Shaw and Partners Financial Services claims in their latest report to clients that the Australian dollar is set to climb to $0.70.

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Australian money, in full-frame. Fifty, twenty, ten and five dollar notes. More Australian money: [url=http://www.istockphoto.com/my_lightbox_contents.php?lightboxID=1195608] [img]http://robynm.smugmug.com/photos/175523593-L.jpg [/img][/url]
They claim that “The OECD purchasing power parity model for the Australian dollar is estimated to be $0.70. If inflation in Australia remains broadly in line with our trading partners, the PPP measure of currency should remain relatively stable” which is good news for suppliers.

In other news for retailers the analysts are tipping a return of SmartPay they claim “This is only set to grow, with 7% of in person card payments in 2022 having a surcharge, up from 4% in 2019. Further, attitudes towards surcharging are growing strongly as customers continue to accept surcharging as the norm, with the percentage of consumers happy to pay a surcharge expected to hit 40% by 2025, double where it was in 2019 (21%)”

“To demonstrate the size of the surcharging opportunity in Australia, we estimate only 80,000 terminals out of million surcharges today”.

According to several economist’s annual consumer price growth is set to drop to 4.3%.

The biggest price increases in the quarter were a 3.9 per cent increase in domestic holiday costs, and a 1.5 per cent rise in the price of newly built homes, where annual inflation was steady at 5 per cent against a peak of over 20 per cent in September 2022.

Retail sales figures released on Tuesday showed a sharp drop in December and confirmed that 13 rate hikes and intense cost of living pressures have flattened spending.

Turnover fell in all the non-food industries that had been boosted by Black Friday sales in November. Household goods retailing had the largest decline at 8.5 per cent, following the largest rise last month.

Department stores also recorded a sharp retreat in spending at 8.1 per cent, followed by clothing footwear and personal accessory retailing (-5.7 per cent), and other retailing (-1.1 per cent).

Treasury’s mid-year budget update in December forecast that inflation will slow to 3.75 per cent by June, and to 2.75 per cent in mid-2025.

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