Australian retail sales fell by much less than expected in December, while snapping four straight months of gains that have underlined households’ continued resilience to high borrowing costs.

Sales slid 0.1% from the prior month, compared with a forecast 0.7% decline, figures from the Australian Bureau of Statistics showed on Monday. The outcome follows a revised 0.7% increase in November, a month boosted by Black Friday. 

“Retail spending held firm following strong growth in recent months with promotional activity stretched across the quarter,” said Robert Ewing, ABS head of business statistics. “Cyber Monday fell in early December and boosted spending to begin the month.”

The figures are likely to reinforce the Reserve Bank’s confidence that the economy remains on a narrow path toward a soft landing. Economists and financial markets widely expect the central bank to finally embark on an easing cycle on Feb. 18.

Monday’s figures follow data last week showing price pressures eased by more than expected in the final three months of 2024, boosting market confidence in a rate cut. 

Retail sales can be an important consideration in policy decisions as consumption accounts for more than half of gross domestic product. The RBA highlighted the outlook for household spending as a key uncertainty when it held the cash rate at a more-than decade high of 4.35% in December.

Prime Minister Anthony Albanese has been counting on at least one rate cut before an election due by May 17. His center-left Labor government is lagging in polls as the electorate is frustrated with cost of living pressures and high borrowing costs.

Money markets imply about a 90% chance of a rate reduction in just over two weeks’ time.