Australian retail turnover rose 0.4% in March 2023, according to figures released by the Australian Bureau of Statistics (ABS). This follows a 0.2% rise in February.
Year on year, retail sales recorded 5.4% growth, again bolstered by cafes, restaurants and takeaway (up 1.5% in March and 17% year on year), and food (up 1% in March and 8.6% year on year).
“Food retailing has now recorded 13 consecutive monthly rises, largely driven by high food inflation,” says ABS Head of Retail Statistics Ben Dorber.
“Businesses in cafes, restaurants and takeaway food services are passing on their rising costs to consumers through price rises, while also benefitting from strong demand driven by the continued return of large-scale cultural and sporting events.
“Spending on non-food retailing, [however], has slowed in response to interest rate rises and increased cost of living pressures. This follows increased spending during and immediately following much of the Covid-19 pandemic period.”
Australian Retailers Association (ARA) CEO Paul Zahra says while some categories continue to show reasonable sales growth year-on-year, overall retail sales are slowing as cost-of-living pressures bite.
“Cost-of-living pressures typically have a lag effect on retail, and we are now witnessing the impact of months of continued interest rate rises and price rises on consumer spending,” he says.
“Household goods were the most obvious discretionary category affected by the reduction in spend in March. This demonstrates the new spending restraint amongst many Australians but also reflects the stronger growth in that category through the pandemic period.
“We can see a softening of year-on-year growth within clothing footwear and accessories and department stores in the March results. It’s important to note that in essential categories like food, inflationary price increases are mostly driving retail spending growth.
Mr Zahra notes that this week’s RBA decision to raise interest rates will create “deep stress” for many households and businesses.
“We’re hopeful that the second half of the year will usher in more stable trading conditions,” he says. “Next week’s federal budget will be vital in providing support measures for the most vulnerable sections of our community including small businesses.
“It continues to be a truly challenging period, with retailers having to contend with continued rising costs, labour shortages and supply chain issues.”