Australian retail sales tumbled more than expected in December, erasing the bumper gain of the previous month when consumers brought forward spending to take advantage of discounts like Black Friday.
Sales slumped 2.7 per cent last month, compared with an estimated 1.7 per cent drop, Australian Bureau of Statistics data showed. The result was the weakest in a year. The weak outcome follows a downwardly revised 1.6 per cent gain in retail sales in November due to heavy discounting, reinforcing a trend observed in recent years of weak December consumption.
“This shift in spending from December to November reflects the growing popularity of Black Friday sales and the impact of cost-of-living pressures, with consumers seeking out bargains and taking advantage of discounts in November,” said Ben Dorber, ABS head of retail statistics.
Retail sales can be an important consideration in interest-rate decisions — with the Reserve Bank’s first meeting of the year scheduled for 5th-6th February — given consumption accounts for more than half of gross domestic product. The RBA left its key rate at a 12-year high of 4.35 per cent last month and warned further tightening may be needed to tame inflation.
From a year earlier, retail sales were up 0.8 per cent, running well below the pace seen in early 2023 as higher borrowing costs and other cost-of-living pressures weighed on household spending.
The RBA has repeatedly highlighted the outlook for domestic consumption as a key uncertainty. Policymakers will get further detail on the health of the A$ 2.3 trillion (US $ 1.5 trillion) economy on Wednesday, when data is predicted to show inflation moderated in the final three months of 2023, according to a Bloomberg survey.
