Consumers in Australia remain cautious amidst high cases

Despite, retail sales showed signs of improvement.

Shoppers in Australia remain cautious after consumer confidence declined gradually to 100.8 in February 2022 from the 10-year high of 118.8 in April 2021.

This follows the rise of cases in March after major cities in Australia, such as Sydney, Canberra, and Melbourne, already eased lockdowns starting October 2021.

Despite the cautiousness, retail sales grew 6.4% year-on-year in January 2022, which is the highest since May 2021. Retails sales started to improve in September 2021 when it increased 1.7% YoY.

“While 2020 base effects are still impacting growth, the Christmas and New Year holiday period was helpful in boosting retail sales figures,” the report read in part.

In addition, nearly 80% of Australia’s population have been fully vaccinated against COVID-19 as of 7 March, making it less likely for the country to be placed under another lockdown.

“As such, the retail spending trajectory for 2022 is on a steady growth path,” Fitch said.

“We note, however, that the consumer confidence index was down by 7.3% y-o-y in Feb 2022, indicating ongoing consumer wariness, as the number of new Covid-19 cases daily continues to remain high in Australia.”

Fitch linked this to the increasing cases in March after two steady months of decline. This could lead to consumers’ reluctance to visit crowded areas that could affect retail spending growth trajectory in the second quarter of 2022.