Cheap drugs, iPhones, and the start of summer could all contribute to interest rate increases.

A rush for the new $1500 iPhone, the federal government’s cheap medicines policy and a bout of good gardening weather may have sealed the case for the Reserve Bank to take official interest rates to a 12-year high.

Figures from the Australian Bureau of Statistics on Monday showed the value of retail sales rose by a much stronger than expected 0.9 per cent in September, led by a big increase in purchases through the nation’s department stores.

Financial markets were compelled to drastically lower the odds of an interest rate increase on Melbourne Cup Day, from a coin toss to a three-in-four chance, due to a series of unrelated one-off events.

The bureau claims that the second half of the month saw the debut of the new iPhone 15, which helped to drive up the value of new home products by 1.5%. The introduction of Queensland’s Climate Smart Energy Savers Rebate program, which offers citizens up to $1000 off the cost of energy-efficient white goods, heat pumps, and solar hot water systems, was another contributing element.

As more customers brought their purchases forward to take advantage of the federal government’s 60-day distribution scheme, sales of medications increased.

The warm September helped businesses sell early summer season goods, and the bureau also reported an increase in garment sales. People going to gardening centers to buy plants, mulch, and equipment were influenced by the weather as well.

Since the increase in sales value does not account for the effects of inflation, it appears that September’s overall amount of products sold was unchanged. The population is robust as well, and during the last three months, sales per capita have been declining.

On a smoothed trend basis, September was the best month since January, but this year has been the worst since the agency began compiling retail sales statistics in 1982.

The figures, according to ANZ economists Madeline Dunk and Adelaide Timbrell, reinforced the Reserve Bank’s decision to raise interest rates next week, moving the official cash rate from 4.1 to 4.35 percent.

However, they added that the data did support the general weakening of the retail industry, with sales values being just above those of November of last year.

Given the quick rate of population expansion, they claimed that the retail sector’s current underlying weakness is highlighted by the fact that it has taken ten months to return to this level.

“We anticipate that spending growth will be modest throughout 2023, but as real household incomes begin to rise again in 2024, we hope to see a boost.”

Stephen Wu, an economist at Commonwealth Bank, issued a warning, pointing out that one-time policy impacts like the Queensland rebate and the federal 60-day dispensing shift might cause spending to decline in subsequent months, even though September’s increase was likely a pull-forward of anticipated expenditure.

Author: utdinfo_2ye1ln

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