Wayne Cole

SYDNEY – Australian retail sales beat expectations in February, as customers braved weather and coronavirus wave to visit cafes and department shops for their second-best month of spending.

On Tuesday, data from the Australian Bureau of Statistics showed that retail sales increased 1.8% to A$33.1 trillion ($24.76 billion) in February, exceeding expectations of a 1.0% increase.

Sales rose 9.1% over February 2013, following an unexpectedly positive 1.6% rise in January. This suggests that households are ready for another strong quarter.

According to Ben James (ABS director of statistics), “Most discretionary expenditure industries saw strong increases once more as consumers became less cautious, which led to increased mobility and better business conditions.”

Restaurants and cafes saw a 9.7% increase in February compared to the month before, and the clothing and department stores sectors both increased by more than 11%.

It appears that the splurge continues with the most recent card data from Commonwealth Bank of Australia. (OTC:) (CBA). These gains were further supported by the fact that the bank’s latest card data showed additional gains during the week to March 25, when the banks saw a slight dip due to flooding off the east coast.

Harry Ottley from the CBA said, “Spending on recreation has continued its strength.” He added that clothing and footwear were also strong and eating out was increasing in the past fortnight. High petrol prices reflected in high spending on transport.

The high cost of petrol has had a devastating effect on consumer sentiment. However, ANZ Bank’s weekly survey showed that people are feeling the worst mood since the mid-2020 pandemic.

In the lead up to an election in May, rising living costs have become a political hot topic. The government will attempt to placate voters later Tuesday with temporary fuel tax cuts and cash handouts.

The ANZ survey revealed that consumers expect inflation to rise to a decade high, causing problems for the Reserve Bank of Australia (RBA), which has to decide whether to raise interest rates after falling to 0.1%.

Although the central bank stated it was patient, the central bank said they would hope that wages will pick up and that a rise would likely occur later in the year.

The market is betting that it will need to be more aggressive to stop inflation. They expect a price increase of 0.25% in June and then several hikes of at least 1.75% through the year.

($1 = 1.3369 Australian dollars)