(Bloomberg) -- Australian retailers kicked off the new year on a positive note driven by spending for major tennis and cricket tournaments, with sales rebounding in January from a significant decline in the prior month.

Sales rose 1.1% from December, slightly down on an estimated 1.5% gain, Australian Bureau of Statistics data showed Thursday. The outcome follows an upwardly revised 2.1% drop in December after consumers brought forward spending to take advantage of discounts like Black Friday. 

The retail report comes a day after data showed Australian inflation was steady in January at 3.4% when economists had predicted an acceleration. The more subdued sales and consumer price growth suggest the Reserve Bank’s tightening cycle is gaining traction among households.

From a year earlier, retail sales climbed 1.1%, running well below the 4-5% pace seen in early 2023 as higher borrowing costs and other cost-of-living pressures weighed on household spending.

“There has been no growth in retail turnover when we look through the volatility of the past few months,” said Ben Dorber, ABS head of retail statistics. 

“Spending in cafes, restaurants and takeaway food services was boosted this month by large sporting events lifting turnover more than usual. Bumper crowds for the Australian tennis summer and the Big Bash League boosted sales in catering services.”

Retail sales can be an important consideration in policy decisions given consumption accounts for more than half of gross domestic product. The RBA is likely to leave its key rate at a 12-year high of 4.35% next month, though it will almost certainly retain a tightening bias in an effort to further tame inflation.

The RBA has repeatedly highlighted the outlook for domestic consumption as a key uncertainty.

Tuesday’s retail data also showed:

  • Clothing, footwear and personal accessory retailing climbed 2.4%, posting the largest gain
  • Cafes, restaurants and takeaway food services turnover rose 1.3%, snapping four consecutive monthly falls
  • Food retailing, down 0.1%, was the only industry to fall after having been the only one to see a rise last month

--With assistance from Tomoko Sato.

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