Household spending on retail rose 4.8% year-on-year in December, easing from 7% year-on-year growth in November, according to data from the Australian Bureau of Statistics (ABS).

Total household spending on retail reached $38.6 billion, with growth strongest in cafes, restaurants and takeaway food services (up 8.2%). More discretionary categories such as clothing, household goods and department stores recorded more modest gains. 

Spending was uneven across the country. Queensland and Western Australia led annual growth at 6.3% and 7.6% respectively, while NSW and Victoria grew by just over 3% in the month. 

While this rounds out a solid peak trading period, the newly formed Australian Retail Council (ARC) says the softer December result confirms many households brought forward their Christmas shopping, taking advantage of Black Friday discounts and spreading spending across October and November rather than the traditional December peak. 

ARC CEO Chris Rodwell says the data shows consumers remain highly price-sensitive, with retailers operating in an increasingly uncertain environment. 

“For retailers, December has historically carried much of the heavy lifting for the year. When spending is pulled forward into earlier discount periods, it can place additional pressure on already thin margins,” he says.

“We’re not seeing the levels of consumer confidence that will sustain higher levels of spending. Households are chasing discounts, shopping earlier and tightly managing what they spend. Cost-of-living pressures are still very much front of mind. The recent interest rate rise will add to this uncertainty, further undercutting confidence for businesses and their customers.” 

Mr Rodwell says the concern is that short-term slowdowns could become a longer-lasting trend. 

“Retailers have absorbed several patchy years post-Covid. With interest rates rising again, mortgage costs increasing and energy rebates ending, consumer spending remains fragile,” he says.

“The cost of doing business continues to climb – from significant rent and wage increases to energy, insurance and supply chain costs along with the intense cost of retail crime.

“Families are under pressure, and businesses are having to work harder for every dollar.

“Urgent economic reform that eases the cost of doing business will be critical if we’re to avoid a broader slowdown in consumer spending.”