Surprise slump in retail spending

CONSUMERS have put the brakes on spending with August recording the biggest slump in retail sales for more than four years.

Households curbed their purchases by $230 million during the month with the biggest cutbacks felt in household goods, cafes, restaurants, takeaway foods and groceries.

The Australian Bureau of Statistics yesterday reported retail spending fell 0.6 per cent during August, with cash registers clocking up just $25.88 bil- lion, compared with $26.11 billion in July.

The slump, across all states, took economists and forecasters by surprise. They had been expecting a slight increase in shop turnover. The severe fall has further raised concerns that consumers are swamped with debt and higher living costs, led by surging utility bills and stagnant wages.

“Apparently Australians were dieting over August,” Bank of Melbourne economist Janu Chan said yesterday.

“Today’s data reinforces the Reserve Bank’s concern that slow wage growth and rising household debt levels would restrain spending,” Chan said.

“These factors will likely continue to limit consumer spending for some time. The recent strong growth in employment has not been enough to counteract these headwinds.”

The Australian Retailers Association said despite a few sectors showing increased sales, including gambling and online retails, general retail has “suffered significantly”.

“With increased energy costs, higher tax burdens and an inflexible wage system, we need government action to increase consumer and business confidence,” ARA executive Russell Zimmerman said.

Retails sales in Victoria, Queensland and the ACT fell by 0.8 per cent during the month, followed by Tasmania and the Northern Territory at 0.7 per cent. NSW had the smallest decline, just 0.2 per cent.