AUSTRALIA DATA
Retail sales slumped 3.9% m/m in December after an upwardly revised 1.7% rise in November. This was the first fall since December 2021. This is unlikely to derail a 25bp hike in February, as there seems to be some seasonal issues around the shift to shopping during the Black Friday Sales.
- The December quarter rose 0.9% q/q after 2.5% in Q3. This is still solid and in line with Q4 2019, thus indicating that post-Covid pent up demand has probably been worked through. Going forward though we’re likely to see the impact of higher rates and prices, as discretionary inflation rose to a new high of 7.1% in Q4.
- The level of retail sales remains elevated and is up 7.5% y/y after 7.7% in November. 3-month momentum has been strong following Covid and remains positive but now stands at 3.8% annualised (November 9.9%).
- Sales were weakest in those sectors that benefited the most from Black Friday, such as department stores -14.3% m/m and clothing & footwear -13.1%. But food retailing rose another 0.3% reflecting not only higher prices but also the increase in domestic travel. There has been some shift in the post-Covid adjustment towards services spending.
- Given the extent of inflation pressures currently in the economy it will be important to monitor the real retail sales series for Q4 out on Monday to gauge spending trends in the face of monetary and cost headwinds.
Australia retail sales %
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