Data from the Australian Bureau of Statistics (ABS) on
Tuesday showed retail sales rose just 0.2% in February, compared
to a revised 1.8% rise in January. Sales of A$35.14 billion
($23.48 billion) were 6.4% higher than a year earlier.
The figure beat median forecasts of a 0.1% rise, pushing the
local dollar to $0.6673 , up 0.3% for the day.
However, the data confirmed that Australian consumers are clearly slowing purchases, with inflation-adjusted spending on goods falling on higher prices.
"On average, retail spending has been flat through the end of 2022 and to begin the new year," said Ben Dorber, ABS head of retail statistics.
The soft print countered some recent strong data releases, painting a mixed economic picture for a data-dependent Reserve Bank of Australia (RBA), which has said it would consider pausing at the April policy meeting to assess the impact of 10 consecutive rate hikes. Monthly inflation data to be released on Wednesday could also be a determining factor. Analyst forecasts consumer inflation likely eased to an annual rate of 7.1% in February, from 7.4% in January. The RBA has already lifted rates by 350 basis points to an 11-year peak of 3.6% and has said further tightening of monetary policy was likely needed given inflation remained too high, the labour market was tight and business surveys showed solid activity. However, markets suspect that stance might have been overtaken by recent turmoil in the global banking system that threatens to sharply tighten financial conditions.
Investors have all but priced out any chance of a further
hike in the cash rate, and even forecast a chance of a cut later
in the year. But many analysts still think the RBA will hike at least
once more, though some believe it might pause in April before
moving in May following inflation data for the first quarter.
Australia employment rebounded strongly in February, the
jobless rate eased back to near 50-year lows, and business
conditions remained resilient, with sales and employment strong.
($1 = 1.4968 Australian dollars)
(Reporting by Stella Qiu; Editing by Jamie Freed)
