Retail sales flatline in October as shoppers close wallets

The Sydney Morning Herald Finance 20 hours ago

The nation's shoppers stayed at home in October despite the Morrison government's income tax cuts and falling interest rates with retail sales flatlining in the month.

Just a day after the since the global financial crisis, the Australian Bureau of Statistics on Thursday reported there was no increase in retail spending through October.

Sales fell by 0.8 per cent in clothing and footwear, household good sales dropped by 0.2 per cent and department stores reported a 0.8 per cent drop.

October retail sales were flat through the month despite falls in interest rates and the Morrison government's tax cuts.

There was a 0.4 per cent lift in cafes and restaurants while the biggest sector, food retailing, lifted by 0.1 per cent.

Economists had been tipping a 0.3 per cent lift through the month, in part due to the impact of the government's income tax cuts. October was also the month the Reserve Bank delivered its third rate cut of the year, taking the official cash rate down to 0.75 per cent.

The nation's two biggest retail states, Victoria and NSW, went backward during the month. Sales in Victoria dropped by 0.4 per cent while they were off by 0.2 per cent.

Annual growth in Victoria has now slipped to 1.3 per cent, well short of the state's population growth rate of 2.1 per cent. Spending in the state's cafes and restaurants and on takeaway meals has also fallen by 1.2 per cent since October.

NSW's annual growth rate has dropped to 1.5 per cent. Clothing sales and purchases through NSW department stores have both fallen over the past 12 months.

There were better signs in Queensland with sales there up by 0.4 per cent while they also increased by 0.2 per cent in Western Australia.

Ahead of the figures, economists argued the Reserve Bank will have to start the new year with an interest rate cut at its February meeting in part because of the pressures facing consumers.

AMP Capital chief economist Shane Oliver said with the economy growing so slowly it will be difficult for the unemployment rate to fall.

"In this environment we expect to see another two interest rate cuts from the RBA taking the cash rate to 0.25 per cent by March next year and the start of quantitative easing," he said.


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