 |
About Us Join Us Contact Us Policy Statements |
|
|
|
|
|
 22 October, 1999 Deflation Savages Retail Cash Flow Comment by the Chamber Chief Economist, Ian K Perkin, on the September consumer price figures and August retail sales figures issued today. Consumer price deflation (a general decrease in price levels) continued to savage retail sales and the cash flows of retail businesses in August, but has boosted the purchasing power of those consumers still willing spend. Separate consumer price figures for September also revealed deflation continuing to effect on the whole community for yet another month. The broadest measure of deflation, the Composite CPI was down 6 per cent compared with a year earlier after being down 6.1 per cent in the year to August. With unusual "Fall" or Autumn sales beginning to appear in some retail outlets around town and the supermarket price war continuing, it is clear the difficult times for the retail sector are far from over, despite some improvement in tourist arrivals and overall consumer sentiment. Retail sales were only $15.1 billion in August, down 8 per cent on the same month a year earlier and four per cent on their July level, but in real terms (after allowing for deflation) they were up two per cent on a year earlier. This means little to retailers, however, who look to cash flow for the profitability and survival of their businesses, not to the inflation or deflation adjusted figures. For the opening eight months of the year total retail sales, or the revenue flowing to retail businesses was down a substantial 10 per cent, although in a deflationary environment the real drop was only four per cent compared with a year earlier. If there was one bright spot in the retail picture it was in the improvement in sales of cars and other luxury goods in August, but this improvement came from an extremely low base in 1998. The continuation of 6 per cent consumer price deflation into September reflects the pressure retailers are under to restrain prices in a weak domestic market and the continued weakness in the local rental market for residential property. Deflation might have been larger for the
month had it not been for increases in fresh vegetables and domestic telephone charges.
|
OTHER INFORMATION
|
