Embargoed Media Release: March Retail Sales Up - Rba Must Act With Caution

March retail sales up RBA must act with caution

EMBARGOED UNTIL: 0.00 Hours 21 April 2010: Australian retail sales increased strongly over the
month of March, according to the latest Commonwealth Bank Business Sales Indicator (BSI)(i). The BSI,
which tracks the value of credit and debit card transactions processed through Commonwealth Bank
point-of-sale terminals, rose by 0.7 per cent (in trend terms) in March, which was the strongest growth
rate in eight months.

According to Executive General Manager of Local Business Banking at the Commonwealth Bank,
Symon Brewis-Weston, the stronger retail figures are an encouraging sign that business conditions are
slowly improving, but they are not strong enough to warrant an increase in interest rates by the Board of
the Reserve Bank of Australia when it meets in May.

"While the latest figures appear solid, its important that the Reserve Bank doesnt over-react. Interest
rates have lifted sharply since late last year and the effects are being felt, with housing loans down for
five months in a row."

Craig James, Chief Economist of the Banks broking subsidiary CommSec and author of the BSI, said
that although the results are an improvement on previous months, they could have been affected by
unseasonal spending.

"No doubt the latest results are encouraging. The only element of doubt is whether the figures are
affected by the ,,Easter effect. That is, the fact that Easter occurred earlier than usual this year, pushing
seasonal spending into March. Unfortunately, the seasonal adjustment process cant properly account
for changes in the timing of Easter."

Industry Analysis Tourism sector impacted by high Aussie dollar

Of the 20 industries tracked in the BSI, spending was weakest for the tourism industry, with the Hotels
and Motels sector recording no lift in sales over the month of March.

According to Mr James, spending at hotels and motels has been consistently weak over the past year
due to the high Australian dollar and the flow on effects from the global financial crisis.

"The data shows that hotels and motels are still struggling, as a record number of Australians choose to
head overseas for their holidays to make the most of the strong Aussie dollar. To make matters worse,
the inbound tourism market still hasnt fully recovered from last years financial crisis."

State/Territory Analysis ACT leads the way

The BSI found that all states and territories recorded a lift in sales in March. Spending was strongest in
the Australian Capital Territory, recording a lift of 1.2 per cent, followed by Western Australia with a gain
of 1.1 per cent. In contrast, New South Wales and Tasmania recorded most modest gains on 0.6 per
cent.

A full copy of the report is attached.
- ENDS

Media Inquiries: Kate Powditch: (02) 9118 1667: [email protected]












i. About the Commonwealth Bank Business Sales Indicator

The Business Sales Indicator is calculated by tracking credit and debit card transactions
processed through Commonwealth Bank merchant facilities throughout Australia (approximately
30 40 per cent of market).
The Business Sales Indicator has been devised to provide a monthly assessment of spending
trends in the Australian economy and is available to the public on the Banks website and to the
media on or around the 20th day of each month.
Currently, the main monthly indicator of spending in the economy is the Australian Bureau of
Statistics (ABS) Retail Trade release. The main quarterly indicator of spending in the economy
is the ABS Household Final Consumption Expenditure (HFCE). A quarterly measure of the
Business Sales Indicator has closely tracked the ABS household consumption series over the
past three years, highlighting the value of the Business Sales Indicator to track changes in
spending across the economy. The Business Sales Indicator is available monthly; broader
household consumption figures are only available from the ABS on a quarterly basis.
The Business Sales Indicator includes industry sectors based on international Merchant
Category Code (MCC) categories.