The case against another interest rate rise next week has been strengthened by figures showing a fall in the volume of retail sales in the first three months of the year, particularly in department stores. Although the latest official figures showed modest growth in the value of sales in the month of March alone—up 0.5 per cent—the total volume of sales fell in the first quarter of the year by 0.1per cent. The fall coincided with consecutive 25-basis point rate rises in February and March, which followed two increases late last year and three in 2006. The rise in the value of sales in March was mainly driven by food, with prices pushed higher by the drought and fuel costs. The higher prices meant food sales by value were up even though volume was down. CommSec senior analyst Craig James suggested the figures showed consumers were making tough decisions in the face of higher interest rates and food prices. “Soaring global food prices are adding to the inflation burden and unpublished figures by the Australian Bureau of Statistics show that the higher prices are being passed on to consumers,” James said. “Cafes and restaurants have increased prices by the highest levels in over 17 years, yet these increases in prices are not helping in improving profitability, as consumers have sharply cut spending at food outlets over the March quarter.” Weekend Australian, May 3.
May 16
