SYDNEY (Reuters) - Panic buying of toilet rolls and food drove a record jump in Australian retail sales in March, but any economic windfall was sharply curtailed as much of the surge came in prices rather than in the overall volume of goods.
In any case, sales likely dived in April as strict social distancing rules and the closure of many businesses hammered spending on everything from eating out to fashion retailing.
On first blush the numbers for March seemed unbelievably strong with sales climbing 8.5% from February, the largest increase since the series began in 1982.
Food sales alone jumped 24% as consumers rushed to stockpile pasta and tinned goods, while sales of liquor shot up 30%. Soup sales soared 180%, flour more than 140% and toilet rolls 115%, said the Australian Bureau of Statistics.
Household goods also boomed as Australians bought all the gear needed to work from home for the first time.
“There was unprecedented demand in food retailing, household goods, and other retailing,” said Ben James, Director of Quarterly Economy Wide Surveys.
On the other side, sales fell in cafes, restaurants and takeaway food services, clothing, footwear and personal accessory retailing.
The net result was that total sales hit an all-time high of A$30.1 billion ($19.36 billion) in March, a whopping rise of A$2.3 billion from the previous month.
However, there was a sting in the tail for gross domestic product (GDP) since much of the gain came from higher prices not volumes, particularly for food.
This meant that sales adjusted for inflation gained only 0.7% in the March quarter, when analysts had looked for a much stronger increase of 1.7%, and limited the contribution to GDP.
In all prices jumped 1.9% in the quarter for the steepest increase since the introduction of a sales tax in 2000.
“The big surprise was a softer than expected result for real retail sales over Q1, with much of the spectacular stock-piling driven surge in March monthly nominal sales due to prices rather than volumes,” said Westpac senior economist Matthew Hassan.
That in turn made it more likely GDP shrank in the March quarter, ahead of what is certain to be a shocking June quarter.
Reserve Bank of Australia (RBA) Governor Philip Lowe on Tuesday said their base case was for a 10% contraction in GDP in the six months to June, easily the largest on record.
Prime Minister Scott Morrison lamented that lockdowns were costing the economy A$4 billion a week and vowed to start easing national restrictions as early as Friday, with the aim of fully re-opening by July.
Reporting by Wayne Cole; Editing by Shri Navaratnam