Australian dollar declines amid unexpected drop in retail sales in Australia

According to data released on Monday, retail sales in Australia unexpectedly dropped in October, marking the first fall of the year. Rising inflation and higher interest rates negatively influenced consumer spending.

Preliminary data indicated a drop in retail sales of 0.2% in October, compared to the September reading, according to the Australian Bureau of Statistics (ABS). Analysts expected retail sales to rise 0.5%. However, they ended up being below September’s reading of 0.6%.

Retail sales suffered their first fall since December 2021 as high inflation and interest rates finally seemed to have an impact on household spending. 

Ben Dorber, ABS head of retail statistics, reported that a decrease in retail sales volumes was a clear sign of the rising cost of living.  Rising interest rates have also begun to affect consumer spending.

Given the recent data, one can conclude that economic growth in Australia will slow.