As household confidence rises, consumer spending is expected to grow specifically during 2021-22.
However, it’s said that retailers will have to compete for consumers’ dollars as more opportunities for spending open up.
This is part of Deloitte Access Economics’ latest quarterly Retail Forecasts subscriber report (Q2 2021).
It’s other findings include:
- ‘Retail spending was relatively soft from January to March, with volumes falling 0.5% over the quarter.
- ‘Growth in retail spending is expected to reach a hefty 5.9% in 2020-21 – the highest growth seen in a decade, however after such a large surge, the forecast for 2021-22 growth is a more modest 0.9% gain.
- ‘Non-food industries will likely experience the greatest slowdown in retail spending into 2021-22, especially apparel and household goods retailing.
- ‘The strong outlook for spending relies on households drawing on any war chest of savings as fiscal stimulus measures unwind and income growth remains muted.’
“Spending options have been limited, and with many households having cash to burn, consumers flocked to retail,” Deloitte Access Economics partner and Retail Forecasts principal author, David Rumbens says.
“This has supported what is likely to be the strongest gain in retail spending in a decade.
“But the next shift in consumer spending is also underway.”
Mr Rumbens continues: “An astonishing 5.5% real spending growth in 2021-22 is needed to meet budget expectations, despite little offered for household income.
“Luckily the war chest of savings built up for many over the past six months is starting to be drawn down, providing some buffer for household spending. These savings will certainly play a pivotal role in supporting spending going forward.
“The signs so far are that consumers are willing and able to play their part in Australia’s economic recovery, but the hit to disposable income, limited population growth and the ongoing vaccine rollout place some risks on that growth for 2021-22.”