Australia’s Retail Sales Volumes Declined in the Fourth Quarter, and Price Growth Decelerated

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The Australian Bureau of Statistics (ABS) recently unveiled data that confirms a 0.2% decrease in retail sales volumes within Australia over the December quarter, thus interrupting four consecutive months of growth.

After a meagre rise of 0.3% in the September quarter of 2022, positive growth was finally observed.

On Monday, the Australian Bureau of Statistics data revealed that retail sales dropped by 0.2% to A$96.9 billion ($66.99 billion) in the December quarter. Better than expected – analysts predicted a 0.6% decline – it is still likely to burden economic growth figures slightly.

Retail sales volumes fell for the first time since the September quarter 2021, with volumes falling across all non-food industries as consumers tightened discretionary spending in response to mounting cost of living pressures,” Ben Dorber, ABS head of retail statistics, said.

Dorber observed that although the inflation rate had fallen to a meagre 1.1% in December, retail prices were still well above average, likely due to sluggish food pricing and deep discounts offered during Black Friday sales.

This was the smallest rise in retail prices for 2022,” Dorber said.

According to the ABS report, department stores were hit hardest with a -2.9% decrease in sales volume, followed by other retailing (-2.4%), and then clothing, footwear, and personal accessory retailing at -2.3%. Household goods retailing fell by 2%, rounding out the list of significant decreases in volume for these industries.

Food retailing (+2.1%) experienced the highest surge, with volumes increasing for the first time post-Delta lockdowns caused by COVID-19. Despite its growth in this period, food retailing volumes remained 1.4% lower than those from last year’s corresponding quarter.

While cafes, restaurants, and takeaway food services only experienced a slight uptick of 0.3%, trading conditions in their respective industries are steadily beginning to return to normality.

The report also indicated that retail prices experienced the slowest growth of the year in the last quarter, which may act to reassure the Reserve Bank of Australia (RBA) that its decisive policy tightening is beginning to dampen demand. As anticipated, the central bank will likely raise rates by a quarter point to 3.35% on Tuesday.

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