Saturday, June 15, 2024

Grocery and restaurants drive April sales

Australian retail sales increased 2.6% in April compared to the same time last year, according to the latest Mastercard SpendingPulse, despite most retail categories experiencing double-digit declines.

The total growth was driven by grocery (up 8.5%) and restaurants (up 8%), the only categories to record growth in April, year-on-year.

With cost-of-living pressures impacting spending there were double-digit spending declines across all other categories: jewellery (down 21.1%), home furnishings (down 17.5%), electronics (down 15.9%) and lodging (down 14.8%).

Apparel (down 9.1%) and fuel and convenience (down 8.9%) also saw decreases in spending compared to April 2022.

Australian Retailers Association (ARA) CEO Paul Zahra says the results suggest the country’s cost-of-living crisis is now deterring retail spending.

“Most categories are recording significant declines now compared to 2022, with households across Australia saddled with mounting cost-of-living pressures and consecutive interest rate rises,” he says.

“We believe that April’s sales growth is predominately driven by price increases on food essentials which make up the lion’s share of retail spending.

“Most retailers thrived last year, with low interest rates and high household savings leading to robust spending growth. It isn’t surprising to see these declines today when compared to a successful period in 2022.

“With discretionary purchasing slowing significantly, it will be a challenging environment for businesses – especially those on tighter margins. Retail businesses are simultaneously battling rising operating costs associated with increasing cost of debt, fuel, energy, labour, supply chains and rent.”

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