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Index predicts continued slowing in retail sales growth

The 25th edition of the AFGC CHEP Retail Index has pointed to a return to slowing retail turnover growth in 2017.

In January, the previous index predicted that the upturn in retail turnover growth experienced in late 2016 would not be sustained into early 2017. This situation appears to be playing out, as caution in the Australian and global economy remain factors limiting retail growth.

The latest index predicts year-on-year growth of 2.6 per cent for the month of March 2017 and 2.8 per cent for the March 2017 quarter, slowing to 2.4 per cent in May 2017 and 2.6 per cent in the June 2017 quarter, according to the index.

Notwithstanding this, the overall economic outlook for 2017 is one of cautious optimism, with a modest improvement in economic indicators, including population, jobs and wage growth considered likely later in 2017.

Australian Food and Grocery Council Acting Chief Executive Officer Dr Geoffrey Annison said: “Slow jobs and wages growth coupled with the continued housing boom, especially in Sydney and Melbourne, is resulting in a cautious approach to discretionary spending persisting over the coming months. It is pleasing to see, though, that signs of recovery are appearing in some categories, such as food and apparel, and that retail spending should increase in the latter part of the year as the economy strengthens.”

President of CHEP Asia Pacific Phillip Austin said: “Supported by latest pallet data from CHEP, the index has proven to be a reliable lead indicator for ABS retail trade data since its first edition in May 2011. This edition of the index reminds us that, although the retail environment remains challenging, it also represents an opportunity for supply-chain participants to continue to work together to devise solutions that improve efficiency and reduce waste.”

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