Retail Sales Fall in December, Raising Concerns About Rate Rises

The latest retail trade figures, released by the Australian Bureau of Statistics, show a 3.9% fall in sales for December compared to the previous month. This unexpected drop, which is the largest since the implementation of the GST and during lockdown periods, has raised concerns about the impact of rate rises on the economy. The figures come as the Reserve Bank prepares to make a decision on interest rates next week. Analysts suggest that the fall may be a signal to hold off on rate increases to prevent the economy from stalling.

Key Takeaways:

• The 3.9% fall in retail sales in December is the largest since the introduction of the GST and during lockdown periods.
• The seasonally adjusted figure means that the data is adjusted to account for the usual spikes in spending during Christmas and Boxing Day.
• Despite the fall, overall retail trade still shows a similar picture, with spending on "other retail" and dining out increasing significantly since the pandemic.
• The past three years have been affected by the pandemic, with changes in spending habits and inflation playing a significant role in the current retail sales figures.
• Using a three-month rolling average, spending has indeed stalled, with a similar pattern to the 2021-2022 period when there was a large fall in December but retail trade carried on fine the following year.
• Inflation has risen 1.9% in the last three months, which, combined with the cost of living increases, has led to a decline in the volume of retail spending.
• The Reserve Bank's next decision on interest rates is crucial, as rate rises are having an impact on households and may lead to a sharp economic slowdown.

Statistics:

• Retail sales in December fell 3.9% compared to November (Source: Australian Bureau of Statistics).
• The cost of living increased 1.9% in the last three months, including a 27% rise in mortgage interest repayments (Source: Australian Bureau of Statistics).
• The total retail spending in October, November, and December was 0.9% above that in the three months to September (Source: Australian Bureau of Statistics).
• The three-month rolling average shows that spending has indeed stalled (Source: Greg Jericho).
• Inflation, including the cost of things not included in retail sales, has risen 1.9% in the last three months (Source: Greg Jericho).
• The volume of retail spending declined due to the rise in inflation and living costs (Source: Greg Jericho).

Sources:

• Australian Bureau of Statistics (Sources cited directly).
• Greg Jericho (Sources cited directly).
• Guardian columnist (Sources cited directly).
• Centre for Future Work (Sources cited directly).