Lift in retail sales forecast

Retailers can look forward to an increase in sales, according to a key indicator.

The AFGC CHEP Retail Index, a collaborative project between the Australian Food and Grocery Council and CHEP Australia, and a lead indicator for retail sales growth in Australia, was 4.2% higher in June 2015, compared with June 2014.

CHEP Asia Pacific President Phillip Austin said the growth trend was expected to continue, with forecasts for August 2015 indicating year-on-year growth would reach 4.7%.

“On a quarterly basis, the index was 4.3% higher in the June quarter 2015 compared with the June quarter 2014, and growth in the index is expected to lift to 4.6% year-on-year by the September quarter 2015,” said Austin.

Household goods retailing continues to be the strongest performing retail sector, according to the latest Australian Bureau of Statistics trend data, probably due to low interest rates and a strong lift in new home building.

Low interest rates also appear to be supporting other discretionary categories, such as clothing sales, which have strengthened since March 2015. However, food retailers have experienced a lower growth rate of around 4% since late 2014.

Australian Food and Grocery Council CEO Gary Dawson said, “It’s encouraging to see low interest rates and a pickup in jobs growth rate flowing through to stronger retail sales. In food retailing, growth is lower than other retail sectors, but at 4% or better, remains strong despite softening population growth, and is likely to continue to benefit from improved confidence and ongoing low interest rates.”

The index uses CHEP transactional data based on pallet movements and is a lead indicator of Australian Bureau of Statistics Retail Trade Data.