Preliminary data published by the Australian Bureau of Statistics (ABS) showed that retail sales increased by 0.4% in March after a rise by 0.2% in February. Economists had expected an increase of 0.2%. It was the third monthly increase in a row. Meanwhile, in annual terms, the growth rate of retail sales slowed to 5.4% from 6.4% per annum, recording the weakest growth since September 2021. This result is a warning signal for consumption, which will only worsen after yesterday's unexpected increase in interest rates by the Reserve Bank of Australia.
The ABS said food retail sales rose 1% after a 0.3% increase in February, while sales at cafes, restaurants and takeaway food jumped 1.5% after a 0.5% increase. Sales of household goods fell by 0.4% after a 0.1% decline in February, while sales of clothing and footwear declined by 1%, offsetting a 0.6% increase in February. Department store sales also declined (-0.2%) after rising 1% in February.
Treasurer Jim Chalmers said today that the RBA rate hike was a "cruel reminder" of the economic challenges facing the country and called for restraint in the upcoming federal budget (to be presented on Tuesday) to avoid exacerbating Australia's inflation problem. Yesterday, the RBA maintained its forecast that inflation is only set to return to the top of the 2-3% target range by mid-2025. Markets are now pricing around a 33% chance of a further rate hike to 4.10% by August.