Just what the Reserve Bank wants to see – the first fall in retail sales this year, according to the monthly data for October.
The Australian Bureau of Statistics figures yesterday revealed a 0.2% dip in October’s retail sales – a fall that was larger than the headline figure indicates because it doesn’t take inflation into account.
And the fall was made more noticeable because it came after two solid 0.6% rises in August and September.
It’s not only a sign the successive rate rises from the RBA and rising prices (which the rate rises are trying to cool) are impacting consumer spending but it also sets up a pretty weak Christmas period for retailers with the central bank to again lift rates a week today (Tuesday).
Interestingly the dip was led by a big fall in department store sales (ending the rebound in sales reported by the likes of Myer, Kmart and Big W in recent months?).
And the fall was also led by big falls in small states and territories while NSW, Victoria and Queensland saw much smaller drops in percentage terms but bigger falls in dollar terms (because those state shave larger retail markets).
Monthly inflation data tomorrow (Wednesday) will give us a better idea of the fall in real terms, but regardless of that, the RBA has been looking for a sign that consumer demand is slowing and this is what they got in the October data.
Ben Dorber, the ABS head of retail statistics, said in Monday’s release: “The October fall in retail turnover ends a run of nine straight monthly rises and suggests increased cost of living pressures including interest rate rises have started to weigh on consumer spending.”
“Turnover fell in all industries in October except for food retailing, which rose 0.4 per cent boosted by flood-related spending in parts of Australia and continued high food prices.”
Department stores saw the largest fall, down 2.4% (lots of discretionary spending being cut there), followed by clothing, footwear and personal accessory retailing, down 0.6%.
Department stores fell for the second consecutive month, while clothing, footwear and personal accessory retailing is down after a 2.0% rise in September. Household goods retailing fell for the second consecutive month, down 0.5%, the fifth fall in the last seven months.
Cafes, restaurants and takeaway food services saw its first fall since January 2022, down 0.4% and other retailing fell 0.2%.
“Elevated post lockdown demand and price increases had boosted sales throughout the year in cafes, restaurants and takeaway food services. A slowdown in growth in recent months, capped off by the fall in October, shows trading conditions continued to normalise”, Mr Dorber said.
Sales fell across the country with the small Northern Territory market seeing the biggest fall, down 1.8% followed by Tasmania (a fall of 1.7%), the Australian Capital Territory (down 1.4%), Queensland (-0.4%) while NSW and Victoria saw drops of 0.1% apiece. Sales in WA and South Australia were unchanged, according to the ABS.
It is likely the increased ‘Black Friday’ sales promotions in local retailing (imitating the US post-Thanksgiving sales season) will drag forward sales from the run up to Christmas rather than providing a lasting boost. That could a sluggish end to retail sales for 2022.
