New figures show a run of strong monthly gains in retail turnover are largely the result of price rises.
The value of retail trade rose by 0.5 per cent in December, the Australian Bureau of Statistics said on Thursday.
It was the fifth in a run of solid monthly gains and lifted annual growth to 5.7 per cent, the fastest through-the-year growth recorded since November 2009.
That run followed a flat spot in the middle of 2013 which left the value of retail turnover lower in June than in February.
This recent pickup has led some economists to expect a brighter performance for the economy than the dull effort of 2013.
But the figures on Thursday suggest that’s only partly because consumers are keen to buy more.
It’s also because what they want to buy is costing more.
The value of retail turnover in the December quarter was 2.0 per cent higher than in the preceding quarter.
It was the biggest quarterly rise since the March quarter of 2009.
But the picture changes after allowing for price changes.
In real terms – or chain-volume terms, the way the ABS prefers to put it – turnover rose by 0.9 per cent in the December quarter.
That was a solid rise, but only 0.2 stronger than average of the past decade, which included the global financial crisis and a world recession.
And whether that growth rate is sustained, or was just a one-off bounce back from the pause earlier in the year, remains to be seen.
Stagnating employment growth and weak wages growth suggest it won’t, at least not until the housing price surge is translated into a pickup in building activity.
The rest of the December quarter increase the value of turnover was the result of price rises.
The ABS said price rises added 1.1 per cent to the value of turnover in the quarter.
The only bigger quarterly rise in retail prices in the past decade was in the March quarter of 2009, when prices rose by 1.4 per cent.
And there’s a reason why the previous big price rise was in the March quarter of 2009.
Just like the latest price jump, it followed hot on the heels of a big drop in the value of the Australian dollar.
The exchange rate slumped in late 2008 as investors reacted with alarm to the global financial crisis in late 2008.
In the December quarter of last year the Aussie dollar was trading around 10 per cent below its 2011-2012 average.
That followed a mid-2013 slide in a response to weaker export commodity prices and the prospect of higher interest rates in the US.
So, yes, retail trade has picked up, but a lot of the pickup has been the price effects of the lower exchange rate and the recovery in retailing is not quite as strong as it seems.