What: Australian retail sales unexpectedly fall 0.1% in April amid weakening consumer confidence, prompting expectations of further interest rate cuts.

Why it is important: The unexpected drop in retail sales demonstrates how global trade tensions and domestic economic factors are impacting consumer behaviour.

Australian retail sales experienced an unexpected 0.1% decline in April, contrasting with economists' forecasts of a 0.3% increase. This downturn follows disappointing economic data, including weaker-than-expected private capital investment and flat construction work figures. The decline was particularly pronounced in clothing, footwear, personal accessories, and department stores, which both fell 2.5%. However, food-related spending showed resilience, with cafes, restaurants, and takeaway services growing 1.1%, partially offset by a 0.3% decline in food retailing. The data has influenced market expectations, with traders now fully pricing in three more interest rate cuts this year, compared to previous expectations of two cuts. Annual retail sales maintained 3.8% growth, though the monthly decline has raised concerns about household spending, which accounts for more than half of GDP.

IADS Notes: Australia's unexpected retail sales decline reflects broader shifts in consumer behaviour and economic conditions. According to Retail News Asia's May 2025 coverage , while March showed 4% growth led by cosmetics and recreational goods, the sector faces increasing pressure from cost-of-living concerns and economic uncertainty. WWD's April 2025 analysis  revealed how global retail growth is moderating to 2.7-3.7% for 2025, with consumer confidence declining due to lingering inflation and tariff anxiety. Inside Retail's March 2025 report  highlighted how China's modest 4% retail growth amid government stimulus efforts demonstrates the regional challenges of maintaining consumer spending. Retail Week's February 2025 coverage  showed similar patterns in the US, where January sales fell 0.9% month-over-month despite 4.8% year-over-year growth, indicating how channel-specific performance varies amid evolving shopping patterns. The Australian market's 0.1% decline, particularly in clothing and department stores, suggests broader challenges in discretionary spending as consumers respond to economic uncertainties.

Australian retail sales unexpectedly fall