Retail sales growth fell just short of expectations in January, and there’s a risk that spending will run out of stream in coming months.
Sales rose 0.3 per cent in January to $24.8 billion, below the 0.4 per cent rise expected by economists.
Household consumer goods drove the sales growth, up 0.5 per cent.
AMP chief economist Shane Oliver said spending growth was encouraging given low wages growth and average confidence levels.
“Today’s retail sales data is continuing to suggest okay growth in Australia,” he said.
The Australian Retailers Association is hopeful that spending growth continues.
“While this is a great start to the new year, what we really would like to see is sustained, incremental rises in retail sales,” executive director Russell Zimmerman said.
“Retailers are now coming off the strongest trading period of the year, being December and January, and maintaining the momentum of Christmas and post-Christmas is vital.”
Interest rates and fuel prices remain low, supporting spending, but the lower Australian dollar makes imported products more expensive.
RBC Capital Markets economist Michael Turner expects slow wages growth and a cooling housing sector will dent household consumer spending.
“We expect household consumption to decelerate through 2016, as tailwinds from the housing market weaken and spending better aligns with the modest growth in wages,” he said.
ANZ economists also warned that retail trade could soften due to weak business conditions, low wages growth and average consumer confidence.
“Retail sales data disappointed for the second consecutive month and momentum appears to be slowing,” they said.
“We see headwinds for consumer retail spending this year.”
WHERE THE MONEY WAS SPENT IN JANUARY
* Stationery, antiques and flowers up 2.3pct
* Hardware, building and garden supplies up 2.1pct
* Cafes, restaurants and catering services up 1.9pct
* Sport equipment, entertainment and toys up 1.7pct
* Newspapers and books down 1.5pct
* Liquor down 1.3pct
* Department stores down 1.3pct