Wednesday, June 19, 2024

Retail sales up 1.6% in March

Australian retail turnover increased 1.6% in March 2022, reaching a new record level, according to the Retail Trade figures released by the Australian Bureau of Statistics (ABS).

Director of Quarterly Economy Wide Statistics Ben James says the result was up 0.8% on the previous record level set in November 2021. This follows a 1.8% rise in February 2022, a 1.6% rise in January 2022 and a fall of 4.1% in December 2021.

“Rising prices, combined with the continued easing of restrictions across the country has led to rises in turnover in all three months of the March quarter.

“Consumer spending rose across both discretionary and non-discretionary industries.  Following flooding in late February and early March along the east coast, impacted businesses regained lost turnover from forced closures as consumers restocked pantries.”

Leading the increase across all industries was household goods retailing, up 3.4%, followed by other retailing (2%), cafes, restaurants and takeaway food services (2%), department stores (4.1%), food retailing (0.5%) and clothing, footwear and personal accessory retailing (0.5%).

The National Retail Association welcomed the strong sales figures for March, ahead of looming tough times for retail businesses.

NRA CEO Dominique Lamb says the increase in retail turnover of 1.6% for the month and 9.4% year-on-year (seasonally adjusted) was a sign of continued recovery for the industry.

However, Ms Lamb said Tuesday’s (3 May) interest rates announcement, coupled with looming increases in superannuation and award wages from 1 July, meant that the good times could be short lived.

“This is a good result for March, and although the recovery is still patchy it indicates that retail is heading in the right direction,” she said.

“However, the looming increases in interest rates, superannuation and award wages represent a very unwelcome triple whammy for business owners.

“We would be very concerned if the Reserve Bank Board were to use these figures as justification for a further rates hike in June. We think they need to wait and see how yesterday’s increase affects the May retail sales results before they move again.”

Department stores and household goods retailing were the strongest sectors in March, while food retailing, and clothing, footwear and personal accessories remained weak.

“These varying results demonstrate that inflationary pressures are not uniform across the nation, and show the need for the RBA to wait and see the impact of its first rate increase before moving again.”

Australians spent $33.6 billion in stores and online in March, eclipsing the previous record of $33.3 billion set in November 2021, when consumers enjoyed the Black Friday/Cyber Monday sales and were shopping early for Christmas.

Australian Retailers Association CEO Paul Zahra says it’s a phenomenal result, however spending challenges loom for the months ahead as cost-of-living pressures begin to impact family budgets.

“We’re in an uncertain economic environment, with cost-of-living pressures starting to bite and interest rates rising for the first time in over a decade. Whilst the top line performance of retail trade is strong, consumer confidence has fallen significantly this week and we could see more subdued levels of consumer spending in the months ahead as people start to tighten their household budgets,” Mr Zahra said.

“Whilst it’s pleasing to see record levels of retail sales for March, we know that increased consumer prices that are flowing through the economy have contributed to the result. The eased Covid restrictions have also helped lift sales, and businesses are now able to trade closer to their full potential, with the relaxation of close contact isolation requirements helping to alleviate staffing pressures.

“We’re encouraged by the performance of clothing, foot wear and personal accessories, which recorded a 14.3% year on year sales increase, and cafes, restaurants and takeaway food (up 13.2%) – two sectors that have been amongst the hardest hit through the pandemic. We are also pleased to see year on year growth in March for department stores (up 1.3%).

“Despite the increased pressure that’s set to be placed on family budgets in the coming months, with further interest rate rises predicted, we’re expecting sales to remain reasonably robust given the high savings rates of Australians throughout the pandemic, and the ongoing potential for domestic tourism spending to flow onto retail for the remainder of the year,” Mr Zahra said.

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