The all important December sales figures are out and there are some interesting observations, particularly from Commsec's Chief Economist Craig James.
Firstly, December retail sales declined slightly although the long suffering footwear and personal accessory categories were up 4.2%. Department stores showed a slight improvement, and clothing, hardware and garden supplies were up. Newspapers and books showed a massive 7.2% drop. Pharmaceuticals, cosmetics and toiletries were down 2.8%.
Many commentators have noted the apparent failure of interstate rate cuts to stimulate consumer spending. However Commsec's Chief Economist Craig James makes the point that interest rate cuts can actually impact negatively. James points our that consumer spending has actually declined since the Reserve Bank started cutting rates in 2012. “Given that there are more term and “other” deposits in the economy than owner-occupier home loans, the people that rely on interest income may have curtailed their spending to a greater extent in response to rate cuts than home buyers have lifted spending.”