|Australian Christmas Sales,|
Australia-SYDNEY -(Profile Facts)- The outlook for Australian retail sales this Christmas is particularly sour despite robust jobs and income growth, Access Economics said Monday.
Partly leading to the depressed outlook is a string of interest rate rises from the country's central bank, with the Reserve Bank of Australia having raised rates seven times in its last 14 meetings, bringing the cash rate to 4.75%. In addition, after the RBA's November hike, the country's four largest banks each raised home lending rates beyond the RBA's 25-basis-point increase, which Access Economics called a "double whammy" likely to also limit house building activity, another problem for retail.
"While Christmas looks like recording only modest sales growth for the traditional parts of retail compared with last year, we do expect there will be a better news story for retail in 2011. That will be driven by the strength of job gains in 2010, which look like continuing into the early part of 2011 at least," said Access Economics Director David Rumbens in a statement.
Access Economics said inflation-adjusted real retail sales will likely grow by 3.2% in the year ending June 30, 2011, in line with its September forecast. For fiscal 2012, the firm expects sales growth of 4.1% and 3.0% growth the year after, the latter year hurt by higher interest rates and a downturn in Australia's terms of trade.
In the latest monthly sales report, Australian retail sales slumped in October as shoppers lumbered with higher borrowing costs stayed at home or took advantage of a surging currency to buy online. Sales fell by a seasonally adjusted 1.1% in October from the previous month, with discretionary spending on cafes, restaurants and clothing hit hard, according to the Australian Bureau of Statistics. It was the largest monthly fall in retail sales since July 2009.