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(Australian Associated Press)
Local consumers aren’t happy – despite a rebound in full-time jobs growth, wealth gains from housing, and lower retail prices.
Retail spending has picked up but consumer sentiment has drifted lower, according to a Deloitte Access Economics report released on Tuesday.
“Despite improvements in unemployment expectations and an increase in business confidence, consumer sentiment is at a low point with concerns over financial risks,” Deloitte Access Economics partner David Rumbens said in the report.
“And in the face of oncoming competition from the likes of Amazon, widespread aggressive discounting to lure in the consumer dollar, and rising energy prices, it’s likely retailers aren’t so happy either.”
Mr Rumbens said intense competition is keeping all retailers focused on lower prices, while Amazon’s local launch will lead to further downward pressure that – combined with rising energy costs – is expected to dent profits.
The pressure facing local retailers is illustrated by new CommSec figures showing Australia dropped from being the 17th cheapest place in the world to buy a new iPhone in 2016 to 25th in 2017.
An iPhone 7 32 GB is $A1,079 in Australia, about 24 per cent more expensive than in the US.
CommSec chief economist Craig James said the stronger Aussie dollar means Australia is no longer amongst the cheapest places in the world to buy popular technology.
Nonetheless, Deloitte expects retail spending to continue to grow at 3.6 per cent in the year to June 2018, the same as in the previous 12 months.
But volume growth rather than price growth is expected to underpin trade in the year ahead.
Retail volume growth for the year to June, 2017 was 2.5 per cent and Deloitte has forecast it to lift 3.4 per cent in the year ahead.