Investing.com-- Australian retail sales grew less than expected in January, extending a recent run of underperformance as high inflation and interest rates continued to chip away at consumer spending.
Retail sales grew 1.1% month-on-month in January, data from the Australian Bureau of Statistics showed on Thursday. The reading was lower than expectations of 1.6%, but rebounded from the 2.7% decline seen in December.
Thursday’s data furthered the notion that Australian retail spending has largely stagnated over the past year, amid persistent pressure on household finances from high inflation and interest rates.
January’s increase in retail sales was also partially driven by a sharp fall in December, as year-end holiday spending slowed.
“Retail turnover was unchanged in trend terms in January. This means there has been no growth in retail turnover when we look through the volatility of the past few months,” Ben Dorber, ABS head of retail statistics, said in a statement.
High rates were a key weight on spending, after the Reserve Bank of Australia raised interest rates by a cumulative 425 basis points over the past two years. But they now appeared to be having their intended effect of reducing local demand and bringing down inflation.
Other data showed that Australian business spending also remained subdued, but saw some signs of recovery in the fourth quarter. Private new capital expenditure grew 0.8% quarter-on-quarter in the three months to December 31, more than expectations for a rise of 0.4% and the 0.6% growth seen in the prior quarter.