Friday, February 05, 2010
The surprise finding in the eagerly-awaited December Bureau of Statistics report mirrors that of Myer which yesterday reported "negative" Christmas sales when compared with the year before and helps vindicate the Reserve Bank in its decision to keep interest rates on hold in February while it assesses the impact of its three successive rate hikes in the lead-up to Christmas.
"There is a strong case for continuing to assess both the impact of the three rate hikes delivered before Christmas and the broader strength of the household sector before tightening policy further said Chamber of Commerce and Industry chief executive Peter Anderson.
"The full impact of the cash stimulus payments have run their course... and retail data is now giving us a clearer read on the underlying strength of consumer demand. The picture suggests the recovery remains tentative with some time to go before more robust conditions return."
Shoppers shunned department stores in December spending an extraordinary 3 per cent less than the December before, the first time in almost two decades that one Christmas hadn't improved on another.
Discounting was so rife that the Bureau of Statistics reports that overall department store prices increased not at all in the three months to December, household goods prices fell 1.3 per cent and clothing and shoe prices fell 0.7 per cent.
"Consumers were scouring for bargains," said CommSec economist Savanth Sebastian. "Retail prices climbed only 1.5 per cent over the entire year, the lowest in four years. Smaller retailers were the big winners. Sales at the big stores slid while smaller retailers posted the best monthly result in a year."
Total retail sales were up 3 per cent on the previous December although down 0.7 per cent in seasonally-adjusted terms between November and December."
Every type of spending was down in seasonally-adjusted terms apart from spending on cafés and restaurants. Seasonally-adjusted spending also fell in very state apart from NSW where it grew just 0.1 per cent.
"The impact of the three interest rate rises is beginning to show," said Australian National Retailers Association chief executive Margy Osmond. "Until late in the year interest rates were low and many people received cash handouts which lifted spending massively. This year retailers are relying on fundamentals and there are some pretty strong headwinds including the prospect of more rate rises and discount-orientated shoppers".
Published in today's SMH and Age
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