Discounts Drive Increase In Retail Volumes

Q4 real retail sales were stronger than expected rising 0.3% q/q but Q3 was revised down 0.3pp to -0.1% and Q2 to -1.1%. Discounting around the end of the year simultaneously encouraged spending and weighed on prices. Consumption remains weak but people are able to spend at the right price.

• This data may mean household consumption in the Q4 national accounts released on March 6 may be stronger than the rest of 2023, but services spending in the quarter remains unknown and has the larger share of the total.
• The ABS notes that real sales per person fell 0.3% q/q, the sixth consecutive drop, to be down 3.5% y/y. Price pressures have resulted in households cutting back on their spending but per person it is still above pre-Covid levels.
• Retail prices rose only 0.1% q/q and 2.4% y/y after a peak of 7.6% y/y in Q4 2022.
• The pickup in real retail sales was driven by household goods rising 2.3% q/q. Other retailing rose 0.4%, food +0.5%and department stores +0.2%. Clothing and footwear were weak contracting 1.6% and so were cafes & restaurants falling 2.1%, the third straight drop.

Source: MNI - Market News/Refinitiv