First rate cut in four years had little impact on spending
Australian retail spending continues to grow amid cooling consumer and producer inflation, with all the smoke signals pointing to an interest rate cut in May.
CONSUMER spending continues to tick higher, albeit at a sluggish pace – especially in supermarkets and grocery stores.
Retail trade rose 0.3 per cent in March for a strong annual pace of 4.3 per cent, the Australian Bureau of Statistics reported on Friday.
The data implies that a Reserve Bank cash interest rate cut in February had little impact on spending in March.
That cut to 4.10 per cent was the first in four years.
“Retail spending continues to grow at a steady pace, with food-related spending in supermarkets and grocery stores the main driver of growth,” ABS business statistics head Robert Ewing said.
“Supermarket and grocery store sales were especially strong in Queensland, where households stockpiled essentials in anticipation of ex-Tropical Cyclone Alfred.”
Turnover for the month totalled $37.3 billion.
Food retailing had the largest rise in turnover, up 0.7 per cent, along with other retailing, while sales fell 0.5 per cent for cafes, restaurants and takeaway food, along with services and department stores.
Spending on clothing, footwear and accessories rose 0.3 per cent in the month.
Retail spending grew in all states in March except Queensland, which was in the midst of Alfred.
“The extreme weather early in the month led to significant disruptions for businesses and households throughout Queensland,” Mr Ewing said.
“These included temporary business closures for many retailers, particularly cafes and restaurants, while people were also advised to stay home and avoid unnecessary travel.”
The statistics bureau also released the producer price index, a measure of inflation for sellers of goods and services.
It rose 0.3 per cent in the March quarter to be up 3.7 per cent over the year.
The retail spending figures will play a role in the Reserve Bank’s next decision on May 20 on monetary policy, AMP chief economist Shane Oliver said.
The current market consensus is for a cut of up to 25 points on the day, taking the rate to under three per cent.
