/www.bloomberg.com/ By Victoria Batchelor
Sydney, Feb. 3 (Bloomberg) -- Australian retail sales probably declined in December, which prompted retailers to cut prices to lure Christmas shoppers, who had gone on a spending spree a month earlier.
Sales probably fell 0.2 percent, according to the median forecast of 21 economists surveyed by Bloomberg News. Sales surged 1.7 percent in November, the largest gain in almost two years. The retail report will be released at 11:30 a.m., Sydney time, tomorrow.
Coles Myer Ltd., Australia's biggest retailer, slashed prices at its department stores to kick-start sales in the second week December. On Dec. 11, its Myer Grace Bros. department store chain offered customers 20 percent off the price of all clothing, books, toys and home-wares.
``Retailers say sales were a little weak in the lead-up to Christmas, and that's why Coles Myer had to discount,'' said Brian Redican, senior economist at Macquarie Bank Ltd.
``Consumer spending will moderate this year in line with the slowing in a housing boom. People have bought their house and their new fridge and are now trying to rebuild their savings.''
The economy expanded 3.7 percent in the third quarter from a year earlier, fueled by a surge in housing construction and rising consumer spending. Economists are forecasting economic growth to slow this year to about 3 percent as housing cools.
Retail sales, adjusted to remove inflation, probably increased 1 percent in the fourth quarter from the previous three months, signaling consumer spending will contribute to economic growth in the fourth quarter, according to economists in the Bloomberg News survey.
Even though sales probably dropped in December, spending ``remains strong, underpinned by a firm labor market, low interest rates and resilient consumer confidence,'' said Su-Lin Ong, senior economist at RBC Capital Markets.
The economy added 52,100 jobs in December, capping the strongest year in employment growth since 1989. Consumer confidence rose 0.3 percent in December after a 4.8 percent increase in November, according to Westpac Banking Corp./Melbourne Institute's monthly survey. The central bank's benchmark interest rate is 4.75 percent, close to a 30-year low.