Australian retail sales lifted by 0.2% in February, disappointing the consensus forecast (0.4%) and softening from the 0.3% rise in January. Annual growth eased from 3.8% to 3.6%. The cost-of-living malaise - despite measures to ease the pressure being felt by households - continues to weigh on household demand.
Headline sales saw a slower-than-expected rise of 0.2% in February ($37.1bn) following outcomes of 0.3% in January and -0.2% in December. The 3-month average for retail sales slowed on the back of this latest outcome to just 0.1% - the softest momentum in almost 12 months. Measures to assist with the cost-of-living, including the Stage 3 tax cuts and energy bill rebates, are having some effect while the RBA went on to cut rates in February; however, consumption is still soft.
The monthly composition of sales growth shows that basic food (0.6%) underpinned the headline increase. Retail spending excluding food (discretionary sales) declined by 0.1% in the month, its weakest result since last July. Although department stores (1.5%) and clothing and footwear (0.4%) saw increases, this was offset by falls in household goods (-0.3%) and other retailing (-1%).
Interestingly, retail sales growth swung in several states in the latest month; states that saw gains in January - Victoria, Queensland and Tasmania - all saw declines in February. Meanwhile, New South Wales was the only state that saw a decline in January (-0.3%) but then rebounded in February (0.5%) to post its strongest outturn in 6 months.
