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Australian retail sales decline as household costs rise

Thursday 31st July 2008

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Australian retail sales unexpectedly declined in June, adding to evidence that high costs for fuel, food and credit are sapping consumer spending.

Sales fell 1% seasonally adjusted last month, after rising 0.9% in the previous month, according to the Australian Bureau of Statistics. The biggest declines were at department stores, down 5.2%, and clothing, with a 5% drop.

The retail report comes a day after figures showed Australian home-building consents declined for a second month in June. The central bank has kept its benchmark rate at a 12-year high 7.25% and this month Governor Glenn Stevens said more-expensive credit was likely to result in "a period of significantly slower growth in demand in Australia."

Still, separate figures today showed Australia's trade balance turned to a surplus last month of A$411 million, from a deficit of A$253 million in May. Shipments of coal and agricultural good led an increase in exports, which may help underpin the economy while domestic demand wanes.

New Zealand's exports to Australia, the biggest export market for kiwi goods, rose 27% in the 12 months ended June 30 to NZ$9.2 billion, accounting for about 23% of the nation's total shipments.

By Jonathan Underhill

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