By Stella Qiu and Wayne Cole

SYDNEY (Reuters) – Australian retail sales had their biggest rise in 10 months in November as Black Friday discounts drew cost-conscious shoppers, but the rise missed forecasts that suggested the progress is not hindered by the reduction of the rate.

Analysts suspect that increased demand has just been brought forward from Christmas, with markets still betting that the Reserve Bank of Australia could ease policy in February.

Retail sales gained 0.8% on a seasonally adjusted basis, after rising 0.5% in October, data from the Australian Bureau of Statistics (ABS) showed on Thursday. Expectations are for an increase of 1.0% in November.

The Australian dollar fell 0.2% to $0.6204 on the data.

Sales rose 3.0% compared to a year ago to A$37.1 billion ($23 billion), with ABS noting the promotional activity now spanned the entire month of November, not just the Black Friday weekend.

Sales at department stores jumped 1.8% in the month, while spending at cafes and restaurants rose 1.5%.

“The continued rise in popularity of Black Friday sales in Australia means that seasonal strength will not be effectively channeled through the seasonal adjustment of the ABS,” said Ben Udy, lead economist at Oxford Economics Australia.

“This makes it very difficult to read the underlying strength of consumption from these data, as the strong increase is likely to be offset by a decline in sales in December.”

In fact, sales for December last year were flat after a jump in November.

The sales outlook has been helped somewhat by slowing inflation and major income tax cuts. The pickup in consumer spending so far has been disappointing, however, and was one reason the central bank unexpectedly turned dovish last month.

The RBA has kept interest rates steady for more than a year now, judging that the cash rate of 4.35%, down from a record low of 0.1% during the pandemic, was tight enough to carry inflation in the target band while preserving job gains.

A drop in core inflation on Wednesday led markets to raise bets for a rate cut in February. Swaps imply a 60% chance for such a move, while futures indicate a 78% probability.

The Commonwealth Bank of Australia (OTC:) now sees a cut mean measure of inflation coming in at a quarterly rate of 0.5% in the fourth quarter, while Nomura lowered its forecast to 0.4%, which is lower than in the RBA’s own estimate of 0.7 %.

“We previously assigned a ~60% probability of a first 25bp RBA easing in February and think this is now likely to have risen to at least 70%,” said Andrew Ticehurst, a senior economist at Number.

“A rise in the unemployment rate in December – our base case – will further increase our confidence.”

The RBA will have the December retail sales report, as well as updates on a surprisingly tight labor market before it decides its next move on February 18.