Australian retailers are boosted by Black Friday, but no bar has been set to reduce the rate By Reuters

By Stella Qiu and Wayne Cole

SYDNEY (Reuters) – Australian retail sales posted their biggest increase in 10 months in November as Black Friday discounts attracted cost-conscious shoppers, but an unexpected rise suggested that the increase does not cause an obstacle to reduce prices.

Analysts suspect that more demand has just been generated since Christmas, with markets still hoping the Reserve Bank of Australia could ease policy in February.

Retail sales gained 0.8% on a seasonally adjusted basis, after rising 0.5% in October, data from the Australian Bureau of Statistics (ABS) showed on Thursday. Expectations were for a 1.0% rise in November.

The Australian dollar fell 0.2% to $0.6204 on the data.

Sales were up 3.0% year-on-year to A$37.1 billion ($23 billion), with the ABS noting advertising activity now spans the entire month of November, not just the Black Friday weekend only.

Sales at department stores rose 1.8% in the month, while spending at restaurants and cafes rose 1.5%.

“The continued increase in popularity of Black Friday sales in Australia meant that seasonality was not effectively captured by the seasonal change in the ABS,” said Ben Udy, economist. of Oxford Economics Australia.

“This makes it very difficult to calculate the underlying strength of consumption from this data, as the firm rise may have been offset by the decline in sales in December.”

In fact, sales in December last year reversed after a jump in November.

Sales sentiment has been helped in part by lower inflation and a sharp decline in income tax. However, the lack of consumer spending so far has been disappointing, and was the reason the central bank suddenly reversed course last month.

The RBA has kept interest rates steady for more than a year now, judging that the cash rate of 4.35%, down from a record low of 0.1% during the pandemic, is sufficiently restrictive to bring inflation to that level. which it expects while maintaining employment gains.

A drop in core inflation on Wednesday led markets to raise bets for a rate cut in February. Reversals indicate a 60% chance for such a move, while futures show a 78% chance.

The Commonwealth Bank of Australia (OTC:) now sees a reduced rate of inflation coming in at a quarterly rate of 0.5% in the fourth quarter, while Nomura lowered its forecast to 0.4%, well below the RBA’s estimate of 0.7%.

“We previously assigned a ~60% chance of a 25bp RBA cut in February and we think this has now risen to at least 70%,” said Andrew Ticehurst, senior economist at Nomura.

“A rise in the unemployment rate in December – our main case – could further strengthen our confidence.”

The RBA will have the December retail sales report, as well as the surprisingly tight labor market data before deciding on the next move on Feb. 18.