Australian retailers suffered their worst decline in sales since early 2013 as debt-laden consumers tightened their purse strings.
Thursday’s data from the Australian Bureau of Statistics (ABS) showed retail sales dropped 0.6 per cent in August, confounding expectations for a 0.3 per cent increase, reports Reuters.
July was also revised down to show a 0.2 per cent fall. The 0.8 per cent slump in July and August is the biggest back-to-back fall since October 2010.
In response, the Australian dollar skidded 0.4 per cent to $0.7829, down from a one-week high of $0.7875 set on Wednesday.
Australia’s retail sector had shown some signs of life earlier in the year, but that recovery was short-lived as sluggish wages and household incomes sapped spending power.
The data casts a shadow on the Reserve Bank of Australia’s (RBA) forecasts for the A$1.7 trillion economy to accelerate at 3.0 per cent over the next two years.
The RBA has long feared ballooning debt in Australia’s red-hot property sector was limiting consumers’ ability to spend elsewhere in the economy, one reason it has held rates at an all-time low 1.50 per cent since August 2016.