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Retailers can look forward to improving conditions in the second half of the year, according to new research released by Deloitte. 

Deloitte Access Economics latest quarterly Retail Forecasts subscriber report for Q2 2019 says that real retail turnover growth is expected to slow from 2.2% in 2018 to 1.5% in 2019, before bouncing back in 2020 to 2.9%. 

Factors contributing to this decline include pressure on household finances due to stagnant wage growth and declining wealth which has affected consumer sentiment and willingness to spend. 

Deloitte partner and Retail Forecasts' principal author David Rumbens, said that the combined factors of monetary easing by the Reserve Bank, as well as tax offsets will leave consumers with more money in their pockets to spend. 

"March quarter retail data confirmed our view that consumers are just not willing to spend as they once were. People are pulling back on spending as household finances remain under pressure.

"But our outlook for 2019 is a tale of two halves, and there is some good news ahead.

"While the first half of the year is constrained by weak income growth, the latter half will likely receive a boost as monetary and fiscal stimulus work together for the first time in over a decade.

"A deteriorating labour market, inflation below the target range, weak consumption, and falling house prices were enough to prompt monetary easing by the Reserve Bank of Australia for the first time in nearly three years, and lower rates will leave some much needed cash in the pockets of Australia’s highly indebted households.

"In addition, the post-election sugar hit of tax offsets for low and middle earners are likely to boost household incomes in the second half of 2019.

"Usually tax cuts result in a marginally higher take home pay packet, supporting a gradual and ongoing increase in consumption. The difference this time around is that the tax policy changes will be putting cold hard cash in the hands of consumers once they have lodged their returns. 

"This bodes well for a surge in spending in the September quarter, rising around 1.3% over the quarter, and provide the boost retailers have been craving," he said. 

The data was released on June 17. 

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