"The sector should have been expanding ahead of the Chinese Lunar New Year when people traditionally go shopping and prepare for the holiday"
-Lu Zhengwei, an economist at Industrial Bank
Retail sales in Australia during the festive December disappointed, coming in weaker than expected and supporting the Reserve Bank of Australia's recent interest rate cut. The Australian Bureau of Statistics reported that retail sales climbed 0.2% in December, shy of economists' forecast for a 0.3% increase and following a timid 0.1% rise in the preceding month. Clothing, footwear, and personal accessory retailing was the biggest positive contributor to sales increase in the reported month, advancing 2.7%, while food retailing climbed 0.3%. Consumer spending for the December quarter rose 1.5% to $69.434 billion. A separate report showed new home sales fell for the first time in six months in December, while throughout 2014 monthly sales volumes remained strong. Sales dropped 1.9% on month following the 2.2% surge in the previous month, according to Housing Industry Association.
Earlier in the week, the RBA decided to cut its official cash rate to prop up the faltering economy. The interest rate was lowered by 25 basis points to a new record low of 2.25%. The decision was largely triggered by sluggish economic growth in the midst of the mining-investment slowdown as well as weak inflation. With the vivid exception of the construction sector, growth in other parts of the economy remained below trend.
.
© Dukascopy Bank SA