Spending Holding Up But Q1 Volumes Probably Fell

Retail sales surprised to the upside in March rising 0.4% m/m after 0.2% the previous month. Sales moderated to 5.4% y/y from 6.4% due to Covid-related base effects. Sales levels are in line with October last year and 17.9% above pre-pandemic results. The April RBA meeting statement noted continued uncertainties around the outlook for consumption.

• Q1 nominal sales were flat on the quarter to be up 6.4% y/y after 0.9% and 9.3% in Q4, implying that retail volumes contracted in the quarter. Retail sales volumes for Q1 are released on May 9.
• The ABS notes that the pull back in discretionary spending due to higher rates and cost of living has resulted in sales levels being steady for around the last 6 months. The increase in retail spending in March was driven by a 1% m/m rise in food retailing and 1.5% in restaurants & takeaway, boosted by higher food prices (the series are nominal). The other components fell with clothing & footwear down 1%.
• The ABS also said “Businesses in cafes, restaurants and takeaway food services are passing on their rising costs to consumers through price rises, while also benefitting from strong demand driven by the continued return of large-scale cultural and sporting events.”
• Today large consumer electronics retailer JB Hi-Fi said today that its sales growth is starting “to moderate” from elevated levels and that Q1 sales fell 0.1% q/q but remain well above pre-pandemic outcomes, as reported by The Australian.

Source: MNI - Market News/ABS