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Wednesday 26

September, 2018 9:20 AM



Flat March retail sales miss expectations

Flat March retail sales miss expectations

Retail spending was flat at $26.4 billion in March, with grocery the only sub-sector to show seasonally adjusted sales growth.

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By AAP 08.05.2018 12:32 PM

Economists are not expecting the federal budget to offer any meaningful boost to consumer spending in the long term, after the release of surprisingly weak retail trade figures for March.

Australian Bureau of Statistics data released on Tuesday showed retail spending was flat at $26.4 billion in March, missing market expectations of a 0.2 per cent monthly increase.

Grocery was the only sub-sector to show seasonally adjusted sales growth, with a 0.7 per cent gain.

Cafes, restaurants and takeaways fell 0.8 per cent, household goods declined 0.3 per cent, department stores fell 0.5 per cent, and clothing, footwear and personal accessories declined 0.2 per cent.

Total retail trade was up 0.2 per cent to $78.2 billion for the March quarter.

AMP Capital economist Diana Mousina said low wages growth, lower housing price growth and high household debt are limiting the growth of people's disposable income.

"(The) Federal Budget is expected to include some household income tax cuts, that are targeted towards low-middle income earners," Ms Mousina said.

"Indications so far are that tax cuts would be worth around $5 to $10 a week from July for this group."

But the government has also mentioned that these tax cuts may be done through adjusting the low income tax offset which means that tax relief may only be felt by taxpayers when they do their annual tax return.

Ms Mousina said this type of tax adjustment would have a more muted effect on consumer spending compared to a change in tax brackets or marginal tax rate adjustment.

"So while there may be some small upside to consumer spending from tax relief over 2018, it isn't expected to be enough to provide a longer-term material boost to consumer spending," she said.

JP Morgan economist Ben Jarman said spending in cafes and restaurants has been moderating in the past year in a sign there's pressure on the more discretionary areas due to flat or slow growth in household incomes.

"Today's result does trim some of the upside risk to gross domestic product from the trade data of late, and gives the impression that growth is becoming increasingly reliant on the capex (capital expenditure) and export contributions," he said.

National Australian Bank economist Kaixin Owyong said the data also showed retail sales growth remained the strongest in the non-mining states with Victoria in the lead thanks to strong population growth.

Spending declined in NSW, Queensland, WA and Tasmania, but rose in Victoria, the ACT, SA and the NT.

Online retail accounted for 5.1 per cent of total turnover, up from 3.7 per cent a year ago.

The Australian dollar dipped following the release of the figures.

It was worth 74.97 US cents at 1416 AEST, having been worth 75.21 cents just before the figures were released.

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