Despite product price inflation softened, retailers remain far more optimistic than any other industry, according to the National Australia Bank June quarterly business survey.

NAB reported product price inflation in the June quarter and remained very subdued at just 0.5 per cent, implying price pressures remain well contained. However, price pressure are expected to build into the September quarter, with expected growth rising to 0.9 per cent  (quarterly annualised rate), which may partly reflect anticipated price increases following the introduction of the carbon tax.

Retail prices were even weaker again in the quarter, reporting no growth, compared to growth of 0.2 per cent in the March quarter. This outcome remains consistent with the difficult conditions being faced by retailers at present, suggesting retailers are maintaining low prices to encourage demand. The trend in the quarterly NAB retail price series is broadly consistent with official underlying inflation data.

However, retail was reported as the only industry to show an improvement in business confidence in the June quarter and this expected to remain broadly unchanged in the September quarter.