Australian retail sales have plunged 4.4 per cent in December, according to the Retail Trade figures released today by the Australian Bureau of Statistics (ABS).
The seasonally adjusted results follows consecutive rises in November (+7.3pc), October (+4.9pc) and September (+1.3pc) last year.
The 4.4 per cent fall was the largest monthly fall since April 2020, which was the first full month of the national COVID lockdown.
However, retail sales remain elevated compared to pre-pandemic levels, with December’s monthly turnover the second-highest level in the series following November's record.
"Victorian turnover is now at the third-highest level ever, 6.5 per cent above December 2020."
Sales across all states and territories fell in December — except for the Northern Territory, which rose 3.6 per cent — as lockdown restrictions eased and the introduction of lockouts allowed more favourable trading conditions for businesses.
Victoria recorded the largest fall of any state or territory, down by 8.4 per cent, followed by New South Wales (-4.2pc), South Australia (-4.1pc), Western Australia (-3.5pc), Tasmania (-3.5pc), ACT (-3.1pc) and Queensland (-0.7pc).
Five of six retail industries fell in December, led by household goods retailing (-9.2 pc), clothing and footwear (-17.3pc) and department stores (-21.3pc).
Food retailing, including supermarkets and liquor, was the only industry to rise, up 2.2 per cent.
KPMG senior economist Sarah Hunter said while part of the fall could be attributed to the emergence of the omicron variant across the eastern states, it largely reflected continuing shifts in household spending patterns.
"The timing of the end of the delta lockdowns was also a driver, with pent up demand in NSW, VIC and the ACT released in November."
JP Morgan said that it expects the spike in COVID cases through January will temporarily depress spending.
ASX jumps on RBA decision
On the share market, the ASX 200 closed higher, after the Reserve Bank's decision to keep its cash rate at a record low 0.1 per cent.
The local index was up 0.5 per cent, to 7,006.
The RBA said it would scrap its $350 billion bond-buying stimulus program on February 10, after its first monetary policy meeting of the year on Tuesday.
However, governor Philip Lowe said the RBA would remain "patient" as it monitors inflation trends.
Although the RBA has consistently said that interest rates won’t be lifted until annual wage growth is closer to 3 per cent, some banks expect rate hikes will be coming later this year.
ANZ said it expects the RBA to lift the cash rate to 0.75 per cent by November and then reach 2 per cent by the end of 2023.
While the Commonwealth Bank said "the pre-conditions for a rate hike to be broadly met in August and tip a 15 basis point increase at the RBA Board meeting that month".
"The RBA isn’t convinced that underlying inflation will remain in the 2-3 per cent band," chief economist Craig James from CommSec said in a note.
The benchmark index had a choppy start to the day.
It opened with a rise to 6,980, followed by a fall to 6,951, before rising again.
Ten of 11 sectors ended higher today, with information technology and utilities stocks leading the way, gaining 2.8 per cent and 2.7 per cent.
Appen (+7.9pc) and Pendal (+7.3pc) were among the top movers, while Block and Zip expanded their gains from yesterday, trading at $171.20 (+6.1pc) and $3.31 (+4.8pc) respectively.
On the other hand, BHP (-3pc), Brambles (-2.5pc) and Rio Tinto (-2.4pc) were leading the losses today.
The Australian dollar was flat, at 70.64 US cents.
Oil prices were steady today, with Eastern Europe and Middle East political issues offsetting expectations that major producers will release more supply to a thirsty market.
Brent crude was at $US89.63, up 0.4 per cent.
Meanwhile, CoreLogic released its January home value data.
It shows home prices, nationally, rose 1.1 per cent in January and 22.4 per cent over the past year.
And 2021 saw the biggest increase in house prices since June 1989.
Global stocks rebound
Overseas, Wall Street edged higher on Monday after a rise in European shares helped stabilise investor sentiment after a series of volatile sessions.
Still, investors said the backdrop for equities remains uncertain as central banks tighten policy — the Bank of England is expected to hike rates again on Thursday — and another jolt higher in oil prices adds to inflationary worries.
The pan-European STOXX 600 index rose 0.84 per cent.
Lunar New Year holidays made for thin trading conditions in Asia. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.02 per cent higher.
On Wall Street, the Dow Jones Industrial Average rose 0.1 per cent, while the S&P 500 gained 0.82 per cent.
The tech-heavy Nasdaq added 2.06 per cent, but has borne the brunt of selling and is down 14 per cent from a record peak last year.
Meanwhile, the MSCI World index, while higher on Monday, remains down 6.2 per cent in January, its worst start to the year since 2016.
Before Friday's rebound, the index had been headed for its worst January since the global financial crisis in 2008.
"This is not the classic sell-off affecting lower-quality, underperforming companies. This sell-off is driven not by fundamentals but by the action of central banks at a time when growth is very strong," said Flavio Carpenzano, investment director at Capital Group.
"For years you were like a spoiled child. You could get all the money you wanted and for free and you could buy what you wanted. You didn't care that much about quality. Now it's the other way round.
The stand-off over Ukraine also remains a thorn in the markets' sides, with concerns a Russian invasion would cut vital gas supplies to Western Europe. Moscow denies any plan to invade.
ABC/Reuters
