‘Christmas flop’: Falling sales put pressure on RBA to bring forward rate cuts

Cost-of-living pressures and soaring mortgage repayments forced Australians to slash their spending at a record rate in the run-up to Christmas, putting pressure on the Reserve Bank to bring forward plans for interest rate cuts.

As the International Monetary Fund upgraded its outlook for the global and domestic economies this year and next, data from the Australian Bureau of Statistics showed retail spending in December crashed by 2.7%

It was the largest December fall on record. Consumers in every state and territory sliced their spending, with the biggest drops – of 3.8% – in both the ACT and Western Australia.

Analysts had been expecting a decline, offsetting a surge in November when shoppers took advantage of Black Friday sales to snap up cheap Christmas presents.

But the bureau revised down the November gain from 2.2% to 1.6 %, well short of December’s fall.

Sales across every sector except food fell last month. Expenditure on household goods tumbled by 8.5% while sales through department stores were down by 8.1%.

Senior Westpac economist Matthew Hassan said the figures confirmed a “Christmas flop” and that the situation facing consumers was “unambiguously weak”.

Over the past year, sales have increased by 0.8%. Once population growth is taken into account, the value of sales per capita has fallen sharply over the past 12 months.