The Australian Bureau of Statistics (ABS) revealed today that growth in retail spending was flat in January as shoppers began to curb spending due to rising interest rates and the global credit crunch.
The ABS announced that retail trade growth was flat in January at a seasonally adjusted $20.1 billion, after growing by a revised 0.4% in December and an increase of 0.8% in November 2007.
States and territories that recorded individual increases in the seasonally adjusted estimate include Victoria, up 1%, South Australia up 1.5%, and the Australian Capital Territory, which posted in increase of 1.8%. The largest decreases occurred in Queensland which was down by 1.2%, the Northern Territory, down by 1.1% and Tasmania which lost 1%.
New South Wales, recording no change in the seasonally adjusted estimate, has enjoyed four months of only moderate trend growth, however recreational goods retailing has recorded ten months of strong trend growth. Food retailing suffered a decline in the trend estimate for January 2008.
Victoria has recorded five months of strong trend growth, with clothing, soft goods, recreational goods and hospitality all leading the way.
In Queensland, trend growth has slowed, declining from the strong growth recorded in August 2007. Clothing and household goods, along with Hospitality services, all saw a decline in the trend estimate. Food retailing and department stores recorded only weak growth.
South Australia enjoyed six months of strong trend growth ending January 2008. Food retailing, household goods and hospitality services recorded strong growth. Department stores recorded moderate growth.
Western Australia fell 0.7% in the seasonally adjusted estimate but has suffered only weak growth for the past four months. Food retailing has no change in the trend estimate for January after three months of weak growth. Department stores, clothing and household goods all recorded a decline in the trend estimate.
In January, the major banks independently increased their standard variable mortgage interest rates, to offset higher borrowing costs in international credit markets.
However, economists doubt this will prevent the RBA from raising interest rates again, given its concerns about the outlook for inflation.
Since then, the RBA lifted its official cash rate in February, and today increased it again to 7.25% as it tries to combat swelling price pressures.
Today’s hike represented the central bank’s 12th consecutive increase since May 2002 and will lift the cash rate to its highest level since mid-1996.
