Interest Rate Rises Take Their Toll As Australian Consumer Spending Declines During Christmas

Post by NeilMc on February 4, 2010 · Under Australian Economy, Business News · Comment

Three consecutive interest rate increases in the run up to Christmas appear to have taken their toll on consumer spending, with retail sales unable to maintain November’s strong momentum, according to new data.

On Thursday, the Australian Bureau of Statistics data, released data on consumer spending in December, which suggests that retail spending during the month fell 0.7 per cent to $19.3 billion, after having posted an impressive gain of 1.5 per cent during November.

Despite tapering off in December, the quarter will still have made an important contribution to economic growth.

According to the data, department stores felt most of the decline, with sales falling by 3.5 per cent. Clothing retailers felt the second largest impact, with their sales dropping 1.9 per cent, whilst food retailers posted a 1.3 per cent fall in sales.

The latter two categories had posted strong growth in November, and during December spending at restaurants rose 2.5 per cent.

South Australia saw the weakest retail sales in December, down 3.7 per cent, followed by a 2.0 per cent fall in Tasmania. All states and territories posted weak outcomes, apart from NSW which rose 0.1 per cent.

Despite the poor monthly figures, the overall quarter is still expected to provide a modest contribution to economic growth, when national income accounts are released in March.

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