Consumers in Australia spent less than expected on the eve of Christmas

A slowdown in sales was recently noted by Australian retailers. This is linked to a rapid growth of interest rate in the country, which has been having a negative impact on consumers’ buying power in the run-up to Christmas. 

According to the data provided on Tuesday by the Commonwealth Bank of Australia, the country’s top lender, there was a decline in spending in many categories of goods in the previous week. Such categories as alcohol, clothing and footwear saw a significant fall in spending growth, while they usually demonstrated large outlays on the eve of Christmas in previous years.

Macroeconomic data hasn’t yet reflected the change in consumption. But still, the warning sounded by retailers is one of the first signals that domestic demand gets weaker due to high inflation levels and raising interest rates.

It’s also necessary to remember that the retailers’ downgrades are important for future monetary policy of Australia. As it was repeatedly stated by the central bank of the country, household consumption behavior will become a major factor for determining further levels of interest rates. The Reserve Bank of Australia is now working on slowing demand in attempts to ease soaring inflation, at the same time trying to prevent the economy from entering recession.