Woolworths CEO Brad Banducci says mortgagees and renters are hurting. But Wednesday’s inflation surprise leaves the RBA facing the prospect of lifting rates multiple times.
After weeks of talking tough, Reserve Bank governor Michele Bullock appears to have little choice but to raise interest rates next month after the September quarter inflation data delivered a nasty surprise.
Clearly the rate rise will hit struggling households hard, given the RBA’s own data showed earlier this month that 15 per cent of households already don’t have enough income to cover their monthly mortgage payments and expenses, when hard-to-abate costs like private health insurance and school fees are included.
Given Australia’s obsession with housing – and the importance of the mortgage market as a transmission channel for monetary policy tightening – it’s appropriate that Banducci couched many of his observations on consumer health in housing market terms. . Same store sales are up 5.5 per cent, which is much better than 0.9 per cent fall in like-for-like sales in the June quarter.But Banducci says selling non-food items, and particularly discretionary items, is getting harder.
Also on Wednesday, Super Retail Group, which owns the likes of Rebel Sports, BCF, Macpac and Supercheap Auto, reported like-for-like sales growth of 2 per cent for the first 16 weeks of the financial year, down from 20 per cent last year.
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