Retail spending rose in February after suffering two consecutive months of falls. Image by James Gourley/AAP PHOTOS

Retail spending surged more sharply than expected in February as shoppers stocked up on basic necessities in supermarkets and department stores in anticipation of coronavirus restrictions.

Retail trade rose by 0.5 per cent in February to $27.8 billion, seasonally adjusted, according to figures released Friday by the Australian Bureau of Statistics.

Preliminary retail figures released two weeks ago suggested shoppers frantically buying toilet paper, rice, pasta and other goods due to coronavirus fears would result in a 0.4 per cent rise for the month.

The February rise follows an unrevised fall of 0.3 per cent in January, which was weighed down by people staying indoors because of the smoke from the devastating bushfire that hit eastern Australia throughout the summer.

The latest figures were boosted by a 3.1 per cent rise in department store spending, a 0.8 per cent rise in food retailing, and a 0.7 per cent rise in household goods.

The clothing and footwear sector fell by 2.9 per cent during the month, the largest fall in two years.

National Australia Bank economist Tapas Strickland said looking past panic buying in March, retail sales are likely to decline, along with the broader measure of consumption.

“Spending on many services has collapsed reflecting health measures, including travel, restaurants and food, clothing, cinemas and personal services (gyms, beauticians, etc),” Mr Strickland said.

APAC economist Callam Pickering at jobs site Indeed noted retail spending was weak before the onset of the pandemic in Australia.

December and January were the nation’s first back-to-back monthly retail decline since August 2017.

“Retailers were struggling to push product out the door even before the federal and state governments forced consumers to remain home,” she said

Mr Pickering expects retail activity to remain low until coronavirus restrictions are lifted.

“Even then, a higher long-term unemployment rate and wage weakness, suggests that any future recovery for the retail sector will be sluggish.”

He added that there have only been three quarters this century when household spending has declined. The March quarter 2020 will almost certainly be the fourth and the June quarter the fifth.

Westpac Senior Economist Matthew Hassan expects there to be some volatility in retail spending levels over the next months.

“Disruptions to retail are clearly set to be much larger in March and April with the lockdown set to produce steep falls in some segments that will be offset to further stockpiling demand for basics,” he said.

Home

Panic buying gives retail spending a boost