Retail sales dip as shoppers hold on to cash for sales

Spending weakened last month and by more than expected as consumers hung back to pounce on deals during the Black Friday sales.

Retail sales as measured by the Australian Bureau of Statistics fell 0.2 per cent in October, a softer result than the 0.1 per cent increase that was anticipated.

On an annual basis, retail turnover was 1.2 per cent higher than 12 months earlier.

ABS head of retail statistics Ben Dorber said the fall in October followed a fleeting boost in spending in September, with retail trade lifting a robust 0.9 per cent that month.

‚ÄúTurnover was down in all retail categories except food retailing,‚ÄĚ Mr Dorber said.

‚ÄúIt looks like consumers hit the pause button on some discretionary spending in October, likely waiting to take advantage of discounts during Black Friday sales events in November.‚ÄĚ

He said this was a developing pattern as the sales grow in popularity.

The spending slowdown was the most pronounced in the two biggest states, with Victoria recording a 0.8 per cent fall over the month.

All non-food categories fell in October,.

Clothing, footwear and personal accessory retailing declined the most, sinking one per cent.

Household goods retailing slid 0.6 per cent, department sales fell 0.6 per cent and other retailing dropped 0.4 per cent.

Food retailing picked up 0.5 per cent, while spending in cafes, restaurants and takeaway food services fell 0.4 per cent, marking the second fall in a row.

‚ÄúSpending in cafes, restaurants and takeaway food services has slowed in recent months in response to rising food prices and cost-of-living pressures,‚ÄĚ Mr Dorber said.

Consumption habits remain a focus for the Reserve Bank as it seeks to get inflation under control by lifting interest rates and stifling demand.

The 25 basis point increase to the official cash rate to 4.35 per cent earlier this month was the 13th in the RBA’s fight against inflation.

Oxford Economics Australia head of macroeconomic forecasting Sean Langcake said the retail trade numbers aligned with the narrative of fading consumer momentum as higher interest rates weighed on demand growth.

‚ÄúHowever, they have little bearing on the RBA‚Äôs current struggle to rein in core inflation and we still expect to see another increase in rates in the coming months,‚ÄĚ Mr Langcake said.

The consumer price index, which details price changes across a basket of consumer goods and services, will be released by the Australian Bureau of Statistics on Wednesday.

 

Poppy Johnston
(Australian Associated Press)

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