Australian consumers have continued their aversion to spending, according to March retail sales figures released by the ABS. Despite suggestions of improved retailing conditions in NAB’s business survey which was released a day before, retailing conditions still appear to be tough.
Sales shrank by 0.1% over the month, which is well under the +0.3% growth expected and it follows a 0.2% decline in February. On a year-on-year basis, sales grew by 2.1%, which is down from February’s comparable figure of 2.7% and well below the long term average (see below).
However, March may turn out to be an unusual case. If one looks at the figures on a state-by-state basis, two of the three largest states by population, New South Wales and Victoria, recorded sales increases in both trend and seasonally-adjusted terms. It was Queensland, the third most populous state, which has dragged nationwide figures into the red.
Queensland sales were 1.3% lower on a month on month basis. Part of the reason for such a drastic difference with Victoria and NSW was the effect Cyclone Debbie had on the state in the last week of March and in the first week of April.
However, it was not just a cyclone in one part of the country which had shoppers thinking twice about spending. According to ANZ senior economist Jo Masters, competitive pressures are at the heart of the matter. “Retail sales disappointed in both March and Q1, with soft volumes and weak retail inflation. Trading conditions remain difficult given the combination of strong competition, weak pricing power and low household income growth.”