Australian retailers had a worse-than-expected Christmas as cost of living pressures bite

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There are clearer signs that consumers are feeling the pain of high inflation and successive interest rate hikes as Australian retailers have posted their first drop in sales in almost a year.

Shoppers across the nation spent $34.47 billion in December, a period which coincides with Christmas and Boxing Day sales.

That was a sharp fall in sale turnover (-3.9 per cent) compared to the previous month’s record high, according to new data released by the Australian Bureau of Statistics (ABS) on Tuesday.

It was also much worse than expected, given Reuters-polled economists were only expecting a slight drop (-0.2 per cent).

“This is the first monthly fall in retail turnover for 2022, following 11 consecutive monthly rises,” Ben Dorber, the ABS head of retail statistics, said.

“Retail turnover remains elevated at its sixth highest level in the series and was up 7.5 per cent through the year. The large fall in December suggests that retail spending is slowing due to high cost-of-living pressures.

RBA to keep lifting rates

“Retail businesses reported that many consumers had responded to these pressures by doing more Christmas shopping in November to take advantage of heavy promotional activity and discounting as part of the Black Friday sales event.”

Retail turnover slipped for industries that previously benefited from November’s Black Friday sales.

The biggest falls in December were felt by department stores (-14.3 per cent), clothing, footwear and personal accessory retailers (-13.1 per cent) and household goods retailers (-7.8 per cent).

The only industry that performed better last month was food retailing, which enjoyed a slight rise in turnover (up 0.3 per cent).

Even though consumers are significantly cutting back on spending, it is unlikely to deter the Reserve Bank from lifting interest rates again.

The RBA is set to lift rates by 0.25 percentage points at its next meeting on Tuesday.

Markets are pricing in an 84 per cent chance of that rate increase, according to figures provided by financial data firm Refinitiv.

By business reporter David Chau (Original ABC Article)