Australia’s Retail Sales Rise Less than Expected

Australia’s retail sales rose less than expected in May, following a slowdown in household spending.

Retail sales increased 0.2 percent in May from 0.1 percent gain in April, but below widely speculated 0.3 percent.

Year-on-year, sales dropped from 3.5 percent in April to 3.4 percent in May, the Australia Bureau of Statistics said in Sydney on Tuesday.

According to the report, sales rose 0.7 percent in food retailing, and 0.3 percent in cafes, restaurants and takeaway food services, other retailing surged 1.4 percent.

But the gains were offset by the 1.1 percent decline in household spending and a 1.2 percent drop in clothing, footwear and personal accessory sales.

While the report point to a slowdown in consumer spending, and even expected to get worse in June on account of a bad storm in most part of the east coast and part of Sydney, some economists still expect the Reserve Bank of Australia to keep rates on hold.

Michael McCarthy, a chief market strategist at CMC Markets, said “The RBA is perceived as a “reluctant cutter”, and unlikely to move unless data forces their hand.”

“The sole argument for a cut in interest rates today is the element of surprise, as unexpected moves tend to have higher impact,” he added.