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Retail reaches turning point: Why consumers will spend more in 2019

  • August 27 2019
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Retail reaches turning point: Why consumers will spend more in 2019

By Cameron Micallef
August 27 2019

After years of sluggish growth, the retail sector has reached a turning point due to the combined benefits of interest rate cuts, fiscal stimulus and a stabilisation of the housing market, according to economists.

Retail reaches turning point: Why consumers will spend more in 2019

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  • August 27 2019
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After years of sluggish growth, the retail sector has reached a turning point due to the combined benefits of interest rate cuts, fiscal stimulus and a stabilisation of the housing market, according to economists.

Retail shopping

In its economic update, the Queensland Investment Corporation (QIC) highlighted previously tough retail conditions that were compounded by falling house prices and a mining slowdown. 

It cited optimism in the federal government’s personal income tax cuts of up to $1,080, which it estimated will boost household disposable income by $7.7 billion, or around 0.6 per cent.

Given the tax offset is directed towards low and middle-income earners and is a lump sum, QIC estimated that around two-thirds of the money will be spent rather than saved. 

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This will boost consumer spending by around 0.4 percentage points in 2019-20.

Retail shopping

Based on information from the 2009 tax cuts, QIC considered that around 70 per cent of the additional spending by consumers would be on retail goods, implying a boost to retail sales of around 1.1 percentage points.

Combining the tax cuts with interest rate cuts and house price stabilisation, the QIC is expecting annual average retail sales growth to pick up to around 3.8 per cent in 2020.

Across the states, Victoria is predicted to outperform the other states in retail over the next decade due to stronger population growth, but Queensland and Western Australia are still expected to benefit in the retail sector due to improved mining conditions.

For NSW, the retail sector is predicted to see slow improvement as the housing market stabilises, but this is predicted to be on a smaller scale than seen in previous years. 

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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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