Petrol puts lid on consumer spending - Breaking News - Business - Breaking News

A spike in petrol prices is likely to have put a lid on consumer spending in April, despite improved sales turnover at local department stores.
Australians were paying significantly more at the pump in the month, leaving household budgets stretched and forcing consumers to cut back on spending in other areas.
Retail sales likely grew by a seasonally adjusted 0.3 per cent in April, the Australian Bureau of Statistics is expected to report, following a similar rise in March.
Westpac economist Jonathan Cavenagh said a number of factors had influenced retail turnover in April.
"The main negative for spending, though, was the 11.1 per cent jump in petrol prices through the month to a fresh record high," Mr Cavenagh said.
"This will put a cap on spending growth and underpins our forecast for a modest rise in retail turnover in April."
Westpac is expecting sales growth of 0.2 per cent in the month, while Citigroup is predicting a rise of 0.5 per cent.
Citigroup senior economist Annette Beacher said a scattering of public holidays for Easter and Anzac Day had shortened the number of trading days in April, and that might have affected the seasonal adjustment of the data, which are due out on Tuesday.
"But in contrast, the anecdotes from some of the larger department stores are that sales were actually very good," she said.
The surge in petrol prices in April was the first substantial spike and they had been elevated ever since, Ms Beacher said.
"But that was the first month when it started to hit the headlines and people were talking about it squeezing their spending power."
ABN AMRO chief economist Kieran Davies said while petrol prices began to surge in April, they were likely to have more of an impact on spending in May.
"Retailers suggested that they had modest growth in the month, with people like David Jones saying they saw an improvement towards the end of their reporting season, whereas some of the smaller retailers ... were just thinking a modest rise," he said.
Last week, David Jones chief executive Mark McInnes said trading at the top-end retailer improved in April, possibly because of a change in consumer sentiment and a later Easter, as more shoppers were drawn into stores by the colder weather and holidays.
Mr Davies said the food-driven recovery in the sector over the past few months was likely to have continued in April, forecasting retail sales growth of 0.4 per cent.
© 2006 AAP