SYDNEY — Australian retail sales barely grew for a fourth straight month in May as gains in clothing purchases were offset by a rare drop in food sales, bolstering the case for another cut in interest rates next week.
Investors now see a 97 percent chance that the Reserve Bank of Australia will cut its cash rate of 3.85 percent by a quarter-point next Tuesday as economic growth has remained weak and inflation risks have faded.
The Australian dollar slipped 0.2 percent to $0.6569.
Retail sales rose 0.2 percent in May from April, when they were flat, data from the Australian Bureau of Statistics (ABS) showed on Wednesday. That was short of market forecasts for a 0.4 percent increase and marked the fourth month of sluggish spending.
The A$37.3 billion ($24.5 billion) in sales were up 3.3 percent on a year earlier, the slowest annual pace since November last year.
The data follows a measure of Australian consumer sentiment for May that showed pessimists still outnumber optimists.
“Households will need more convincing to lift spending; many have banked earlier interest rate cuts, rather than spend them through the economy,” said Harry Murphy Cruise, head of economic research and global trade for Oxford Economics Australia.
“Today’s data is another notch in the column to cut rates when the RBA meets next week.”
Food retail sales fell 0.4 percent, the first monthly drop this year, while spending in cafes and restaurants was flat. Spending on clothes grew 2.9 percent and spending at department stores gained 2.6 percent, though those figures followed big drops the previous month.
