Australian retail sales drop 0.3% in January attributed largely to the raging bushfire

The Australian Bureau of Statistics (ABS) released the monthly retail sales report for January on Friday. The data suggested Australian retailers to have been faced with challenges at the start of the new year as raging bushfires continued to weigh on traffic at the stores. Friday’s data shows retail sales in January remained under pressure even before the impact of the Coronavirus epidemic became any kind of a factor.

At A$27.63, retail sales in January saw a 0.3% decline, as per the ABS. The data was also revised for December that suggested a 0.7% decline in retail sales. For January, analysts had expected the retail sales to remain flat (0.0%). While the sales dropped more than expected in January, the ABS highlighted that the reading so far shows no signs of being weighed by the health emergency in China that is spreading rapidly across borders.

ABS Says The Decline Was Not Yet Attributed To Coronavirus

The downbeat data, as per the Bureau, was largely attributed to the bushfires that continued to reduce traffic at the retail stores and cause disruptions in working hours. The hit to tourism ascribed to the bushfires further contributed to pushing the monthly retail sales report into the red territory.

Friday’s data further accentuated that except for food, all other retail sectors posted declines in January. According to economists, retail sales can be expected to remain under pressure in the subsequent months as the effect of Coronavirus starts to reflect in the data.

So far, 60 cases of Coronavirus have been reported in Australia that has resulted in 2 deaths as well. The health authorities, however, are concerned about the rising rate of locally transmitted infection in Australia.

Economists Forecast 1^st Contraction In Australian Economy In 9 Years

The Reserve Bank of Australia opted for three rate cuts in 2019 to support the economy and decided in favor of another one to 0.50% earlier this week in an attempt to add fiscal stimulus. The strategy, however, failed to do much to improve figures for private consumption in Australia.

A few economists have recently forecast that the current quarter may end up posting the 1^st contraction in the A$2 trillion Australian economy in 9 years.

The initial response in the forex market against the monthly retail sales report was the Aussie dollar dropping to 0.6585 against the greenback from 0.6615. At the time of writing, however, the AUD/USD currency pair has recovered the entire loss and is exchanging hands at 0.6617.