Retail spending jumped before lockdown
Retail spending across Australia jumped by a record 8.5 per cent in March as consumers stockpiled food, home and office supplies in anticipation of coronavirus lockdown measures.
Seasonally adjusted retail spending rose to $30.11 billion and followed a more normal rise of 0.6 per cent in February, according to Australian Bureau of Statistics data released on Wednesday.
The result helped boost retail sales to a total of $80.72 billion for the March quarter, although higher prices meant volumes lifted by a modest 0.7 per cent.
The monthly number bettered an optimistic market expectation, with analysts forecasting an 8.0 per cent rise in March. However, the quarterly increase in volumes was lower than expected.
The March result was driven by unprecedented demand in supermarkets, with food up 24 per cent and monthly spending doubled for toilet paper, rice, soup and pasta.
Sales of liquor shot up 30 per cent.
Spending on household goods also spiked, led by increases in hardware, building and garden supplies (17.4 per cent), and electrical and electronic goods (11.3 per cent) as most people were forced to work from home.
However, the impact of social distancing regulations - introduced in the late March - saw sales fall in cafes, restaurants and takeaway food services (down 22.9 per cent), while discretionary spending on clothing, footwear and in department stores was also weak.
Spending on clothing slid by a quarter in March, while spending at department stores fell 8.9 per cent.
Online retail contributed 7.1 per cent to the total retail turnover in March, up from 5.7 per cent a year earlier.
Quarterly retail spending was also boosted by the March numbers, although high food prices moderated retail volumes, the ABS data showed.
"We were expecting a much stronger rise in volumes and today's outcome suggests that retail sales will only contribute 0.1 percentage point to Q1 GDP rather than the 0.25 percentage point that we were assuming," RBC Capital Markets strategist Su-Lin Ong said.
"We continue to expect a modest fall in Q1 GDP at this stage."
Reserve Bank of Australia Governor Philip Lowe on Tuesday forecast a likely case for 10 per cent contraction in GDP in the six months to June.
Analysts also widely expect the boost in spending to be unwound in April as households ease panic buying and job losses take their toll.
"Retail sales should rebound over the coming months although the rebound will be restrained by massive job losses to date and the fact that the states and territories will relax measures according to their own timetable," NAB economist Kaixin Owyong said in a note.
The strong numbers did not surprise the market, with the Australian dollar trading little changed at 64.35 cents per US dollar after the announcement at 1450 AEST.
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