<?xml version="1.0" encoding="ISO-8859-1"?> <docID>328010</docID> <postdate>2024-08-30 15:42:27</postdate> <headline>Tax cuts put away for rainy day as spending spree ends</headline> <body><p><img class=" wp-image-248407" src="https://citynews.com.au/wp-content/uploads/2021/12/woman-g487885f77_1280-e1715213237432.jpg" alt="" width="900" height="600" /></p> <caption>Clothing, footwear and personal accessory retailing fell 0.5 per cent – the largest decline – followed by department stores, sinking 0.4 per cent.</caption> <p><span class="kicker-line">By <strong>Poppy Johnston</strong> in Canberra</span></p> <p><strong>Spending was flat last month, with tax cuts yet to materially improve retailer fortunes as many chose to stash extra cash away.</strong></p> <p>The flat July outcome was below the 0.3 per cent growth consensus forecast and followed two months of upbeat results.</p> <p>Australian Bureau of Statistics head of retail statistics Ben Dorber said discounting had boosted activity in May and June and "the higher level of retail turnover was maintained in July".</p> <p>The start of the month ushered in long-awaited tax relief but CommSec economist Ryan Felsman said it was yet to have a material impact on spending.</p> <p>"Consumer spending on clothing and footwear, and at department stores took a hit last month as shoppers turned frugal amid elevated borrowing costs and cost of living pressures," he said.</p> <p>A record-breaking boost in deposits suggests many households chose to put extra money from the stage three tax cuts into transaction accounts, savings accounts, offset accounts and term deposits.</p> <p>Canstar data insights director Sally Tindall said the $30.8 billion Australians put into the bank in July was the highest monthly increase in dollar terms on Australian Prudential Regulation Authority's records.</p> <p>July was almost always a bumper month for deposits, she said, as people stash money back from tax returns.</p> <p>This year, many households likely put away extra from the stage three tax cuts as well as savings from government electricity rebates in Queensland and Western Australia.</p> <p>"Those households with a mortgage also know that every dollar in their offset account or as an extra repayment is a dollar they're not going to get charged interest on by their bank," Ms Tindall said.</p> <p>For the Reserve Bank of Australia, signs households are using tax relief and cost-of-living help to build up rainy day funds rather than bolster spending will be welcomed.</p> <p>The central bank is hoping for weaker spending and demand so it can break the back of persistent inflation.</p> <p>In July, the bureau recorded the sharpest decline in clothing, footwear and personal accessory retailing, down 0.5 per cent, followed by department stores, sinking 0.4 per cent.</p> <p>Cafes, restaurants and takeaway food services fell 0.2 per cent, and household goods retailing and other retailing were both unchanged.</p> <p>The only industry to record a rise was food retailing, up 0.2 per cent.</p> <p>Over the year, retail sales were up 2.3 per cent, a modest outcome given annual population growth of 2.6 per cent.</p> </body>