Deflation sucks value from retail - ARA

FIGURES from the Australian Bureau of Statistics indicate that the annual level of inflation in Australia has fallen to just one percent, however, the Australian Retailers Association (ARA) says the latest quarterly Consumer Price Index (CPI) figures bring even worse news retailers for food, drinks and apparel.

CPI for food and non-alcoholic beverage dropped to -0.1 percent for the quarter to June 2016, year on year, while clothing and footwear has fallen even further to -0.2.

Russell Zimmerman, ARA Executive Director, said that while there had been an uptick in quarter on quarter CPI for clothing and footwear of two percent, food and non-alcoholic beverages continued its pattern of deflation, falling 0.4 percent on the first quarter of 2016.

“With inflation running well below trend there has been evidence for some time that deflation has been occurring, particularly in the grocery sector,” Mr Zimmerman said.

“With grocery making up close to 50 percent of total retail and indications of stronger competition from international players within other retail segments, we are seeing volumes increase while prices fall.

“While this is a win, for the consumer, Governments at all levels must be conscious of cost pressure on the retail sector and the need to support a more productive retail environment to support the sector’s good health,” he said.

Alcohol and tobacco products showed one of the strongest year on year results of all categories, growing 5.9 percent year on year, while Furnishings, household equipment and services rose by 1.6 percent annually.

“Excise increases are clearly driving alcohol and tobacco prices, despite downward pressure on the real cost of the products,” Said Mr Zimmerman.

About the Australian Retailers Association:

Founded in 1903, the Australian Retailers Association (ARA) is the retail industry’s peak representative body representing Australia’s $293 billion sector, which employs more than 1.2 million people. The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

 ends