Australia sees slip in retail sales

AUSTRALIAN retail sales slipped unexpectedly in December as consumers spent less on food and eating out, a soft end to a subdued quarter for shops and another reason to expect a cut in interest rates this week.!

Yesterday's data showed retail sales slipped 0.1 per cent to A$20.9 billion (US$22.4 billion), short of forecasts for a rise of 0.2 per cent. The report overshadowed figures from ANZ Bank showing a six per cent jump in job advertisements in January, the largest increase in almost two years.!

The Australian dollar dipped briefly on the news while investors continued to look for an easing from the Reserve Bank of Australia (RBA) at its policy meeting today.!

"On face value this is a very flat result and points to ongoing weakness in the retail sector despite a couple of rate cuts," said Michael Blythe, chief economist at Commonwealth Bank. The RBA trimmed rates by a quarter percentage point in both November and December.!

"It also confirms that retail price inflation is practically non-existent, so there's nothing in these numbers stopping the RBA from cutting tomorrow."!

Better economic data in the United States and a pick-up in financial markets has led investors to widen the odds of a cut this week to around 50-50 . But the vast majority of analysts still expect a move, in large part because inflation has turned far less threatening.Reuters