Retail sales fell 0.4% in March from February, well short of the 0.2% rise expected by economists
By
April 30, 2024 at 12:18 am ET
Shoppers carry bags in Sydney, Australia. Sales of music and concert-based merchandise that boosted clothing sales in February by 4.9% reversed most of the gains in March. PHOTO: BRENT LEWIN/BLOOMBERG NEWS
SYDNEY—Australia’s March retail sales were much weaker than expected, further confirming that the pulse of consumer spending has become barely detectable, while also damping recent money market speculation that the next move in interest rates might be up.
Retail sales fell 0.4% in March from February, well short of the 0.2% rise expected by economists.
Some of the drop in sales was attributed to pop star Taylor Swift, who drove up consumer spending in February when she played to sold-out crowds in major state capitals, pushing up spending on travel and merchandise.
Sales of music and concert-based merchandise that boosted clothing sales in February by 4.9% reversed most of the gains in March, the Australian Bureau of Statistics said Tuesday.
But the underlying picture for consumers is far less upbeat, with the impact of higher interest rates and still solid inflation, especially for key services, damping spending and keeping consumer confidence at levels consistent with a deep recession.
For the Reserve Bank of Australia, the economic picture is muddled.
High interest rates are clearly savaging household budgets, but at the same time, inflation was higher than expected in the first quarter, while unemployment continues to hover just above its lowest readings in around half a century.
The RBA’s policy-setting board will meet next week amid speculation that it could reintroduce talk of higher interest rates into its narrative.
Still, economists said the drop in retail sales would allow the central bank to persist with its message that all options are on the table for now.
“Given the sharp drop in retailing across household goods, clothing, footwear and personal accessory and department stores, we should continue to expect prices to fall in the corresponding CPI basket items for these categories,” said Josh Williamson, chief economist Citi.
“The RBA Board now has more space to deliver a balanced message next week,” he added.
The data also showed that the 0.3% gain in retail sales in February was revised down to a gain of 0.2%.
Food sales was the only category to increase in March, with sizable falls across most other categories, the ABS said.
Sales of clothing and footwear dropped 4.3% in March, while department stores sales fell 1.6%, and household goods sales eased 1.4%, it added.
Write to James Glynn at james.glynn@wsj.com
