(Australian Associated Press)
Retail spending dived a record 17.9 per cent in April as strict social and travel restrictions to curb the spread of the coronavirus took a toll on consumer demand.
The depth of the slump indicates that further weakness in household spending is expected over coming months, analysts say.
Seasonally adjusted retail spending fell by $5.38 billion between March and April to $24.73 billion, preliminary figures released by the Australian Bureau of Statistics on Wednesday show.
The slide wiped out the 8.5 per cent jump in March when consumers had stockpiled food, home and office supplies in anticipation of coronavirus lockdown measures.
It was far worse than market expectations, with most analysts estimating monthly declines of between 5.0 per cent and 11 per cent.
Federal and state governments imposed the lockdowns in late March to curb the spread of COVID-19, resulting in widespread job losses and business closures.
Retail spending was down 9.4 per cent from a year ago as stockpiling clearly stopped and restrictions took full effect during April.
The decline was largely driven by the food retailing industry, which recorded a $2.4 billion, or 17.1 per cent, fall in spending.
Monthly turnover in supermarket and grocery stores for non-perishable and perishable goods slid by 23.7 per cent and 15.3 per cent respectively.
There were also heavy falls in spending at cafes, restaurants, takeaway food services, clothing and footwear stores.
Businesses reported that social distancing measures limited their ability to trade as normal for the entire month, the ABS said.
Online retail was the only silver lining and continued to grow, making up 10 per cent of the total retail turnover.
“While an easing of restrictions will bring customers back to an extent, the loss of incomes and employment is also likely to prevent consumers from lifting spending,” St George bank economist Janu Chan said.
“The Reserve Bank has said they expect household spending to fall by 15 per cent in the June quarter. Today’s data suggests that a larger decline is possible.”
Earlier this month, the RBA forecast the economy to contract by 6.0 per cent this year, with unemployment to remain at high levels of about 7.5 per cent through 2021.
To support activity, it cut interest rates twice in March to a record low 0.25 per cent and launched an unlimited quantitative easing program to keep borrowing costs low for banks and consumers.
“The data reinforce our view that the collapse in consumer spending will be a large drag on GDP in the second quarter,” National Australia Bank economist Kaixin Owyong said.
The final estimate of April retail sales is due on June 4.