Retail sales figures have been lacklustre for the past couple of years despite a falling savings rate. Economists have explained the low growth rate as a result of record household debt and modest income growth. While February figures may have done something to suggest a change was about to take place, the latest retail sales figures will have reintroduced some doubts.
Total retail sales (seasonally adjusted) technically shrank by a small amount in March which, after rounding, amounted to no change when compared with February’s total sales. On a year-on-year basis, sales grew by 3.1%, up from February’s 3.0% annual rate.
The flat result follows a robust 0.6% increase in February and a modest 0.2% increase in January. It was below market expectations of a +0.2% increase in bond yields and the local currency falling as a result. Yields on 3 year and 10 year bonds both ended the day 1bp lower at 2.19% and 2.76% respectively while the local currency dropped by around 0.6 US cents to 74.50 US cents.
Only one of the six sales categories, food, recorded a positive growth rate. Spending in all of the other categories went backwards, especially those which could be considered to be more of the discretionary type.