Australian retail sales fell more than expected in December By Investing.com

Amber Warwick

Investing.com — Australian retail sales fell in December, according to Tuesday’s data. That’s because the rising cost of living is putting pressure on spending, and it looks like most of the holiday shopping has already been done in the previous month.

Data from the Australian Bureau of Statistics (ABS) showed a 3.9% month-on-month decline in December. The numbers marked their 11th straight month of gains, well below expectations of a 0.3% decline.

Rising inflation appears to be the biggest factor in the slowdown, with Australia growing faster than expected in the fourth quarter, hitting a more than 30-year high. This inflationary trend is also likely to spur further rate hikes by the Reserve Bank, which is expected to further contribute to pressure on the cost of living.

The sharp decline in retail sales also comes after better than expected in November. That’s because Australians have taken advantage of Black Friday’s discounts to shop in bulk for the holiday season in advance. In its release, ABS noted that the company that saw the highest retail sales in November recorded the biggest drop in sales through his December.

“Retailers reported that many consumers responded to pressure (cost of living) by increasing Christmas shopping in November and taking advantage of significant promotions and discounts as part of Black Friday sales events. ” said Ben Dorber, head of retail at ABS Statistics.

Department store and apparel retailer sales recorded the biggest declines for the month, while food retail, a key driver of retail sales in 2022, was the only industry to register a rise in December.

Separately, December was also down from the previous month, suggesting that consumers are becoming more skeptical about taking out debt due to high interest rates.

Australian consumers are facing increasing pressure from high inflation, low wage growth and rising interest rates. This has recently dropped to the lowest level of 2020, making the economic outlook increasingly pessimistic.

Rising inflation and interest rates are also expected to dampen economic growth in the fourth quarter and early 2023, with the RBA set short term.

Shrinked 0.2% after retail sales reading.