We have our first real sign that Aussie consumers are cutting their spending in response to the Reserve Bank of Australia’s (RBA) aggressive interest rate hikes.
Australian retail sales fell a hefty 3.9% in December; albeit following eleven consecutive rises:
Ben Dorber, ABS head of retail statistics, noted “the large fall in December suggests that retail spending is slowing due to high cost-of-living pressures. Retail businesses reported that many consumers had responded to these pressures by doing more Christmas shopping in November to take advantage of heavy promotional activity and discounting as part of the Black Friday sales event”.
Discretionary spending fell especially hard. Department stores reported the largest fall (-14.3%), followed by clothing, footwear and personal accessory retailing (-13.1%), household goods retailing (-7.8%) and other retailing (-4.6%).
The fall in retail sales was also broad-based, with every jurisdiction across Australia reporting heavy declines:
The result is a clear warning shot to the RBA to reevaluate further rate hikes. If the RBA goes too far, it risks a consumer-led recession.
