Highlights

• Our data mapping points to somewhat moderate growth in April, following a strong March. We see the official ABS measure gaining 0.7% on a month-on-month basis in April, having gained 1.6% in March.
• Our series was notably weaker than the ABS in March (0.2% vs 1.6% m/m) and this gap was not closed by the revisions process. It is not yet clear why our series has been weaker, so we note this as a risk for April.
• Price pressures continue to mount across much of the economy. CPI printed at 5.1% y/y in the March quarter and above-target inflation is likely to continue in the coming months. Food and fuel are seeing strong price growth and our weekly tracking data shows strong spending growth in these areas. This is likely to put some pressure on other sectors in coming months. That said, hospitality continues to record strong growth, suggesting ongoing strength in discretionary spending.

NAB Chief Economist, Alan Oster commented

We see retail sales continuing to grow in April, albeit at a somewhat slower pace than previous months. Inflationary concerns continue to escalate, particularly for petrol and food. While petrol prices eased somewhat following the 22c excise cut announced in the budget, a lower AUD and choppy oil prices are eroding this. The RBA has now lifted rates and we expect further rate rises in coming months.

That said, the NAB Monthly Business Survey continues to report generally very strong business conditions and solid confidence. Further, the April survey recorded a significant pick-up in conditions in the recreation & personal services sector following a period of sustained weakness during the pandemic.

Cost pressures continue to build however, with labour cost growth up to 3.0% and purchase cost growth reaching 4.6% (in quarterly terms) – both new highs. However, output price inflation eased with final product prices rising 1.7% and retail prices up 2.1%. Still, these rates of price growth remain high in the history of the survey and the strength in underlying costs suggests inflationary pressure is likely to continue building over coming months – a challenge for retail.

For more information, please see the NAB Cashless Retail Sales Index (April 2022)