Monday, July 22, 2024

Spending up despite cost-of-living pressures

Australian retail turnover rose 0.6 per cent in August 2022, according to Retail Trade figures released today by the Australian Bureau of Statistics (ABS).

With $34.9 billion spent in stores and online, the August increase was the eighth consecutive rise and follows a 1.3 per cent rise in July 2022, and a 0.2 per cent rise in June 2022.

Food industries drive growth

Ben Dorber, Head of Retail Statistics at the ABS, attributes the rise to the combined increase in food related industries, with cafes, restaurants and takeaway food services up 1.3 per cent and food retailing up 1.1 per cent.

“While households continue to spend, non-food industry results were mixed and only contributed a small amount to the total rise in retail turnover,” he says.

Department stores rose by 2.8 per cent to a new record level, while household goods retailing had its largest rise since March 2022, up 2.6 per cent, having recorded three falls in the previous four months.

Other retailing fell for the first time following five consecutive monthly rises, down 2.5 per cent, and is the largest fall in other retailing this year. Clothing, footwear and personal accessory retailing also recorded its largest fall this year, down 2.3 per cent in August following two consecutive rises.

Record spending continues

Australian Retailers Association CEO Paul Zahra says it’s another outstanding result, with consumers continuing to spend at record levels in the face of cost-of-living challenges.

“Despite an uncertain economic outlook, rising inflation and cost of living pressures, consumers are continuing to open their wallets and spend at record levels. This is the eighth consecutive month-on-month rise in retail sales, which is truly remarkable considering the challenging economic environment,” Mr Zahra says.

Mr Zahra remains cautious about the economic outlook, noting the full impact of the RBAs interest rate increases flow through the economy, and inflation is yet to reach its forecast peak. The cut to the fuel excise, ending at midnight tonight, will add further financial pressure to businesses and consumers, he adds.

“However, as it stands – retail sales are continuing their record-breaking run and businesses will be hoping that momentum continues,” Mr Zahra says.

Caution warranted

CreditorWatch Chief Economist Anneke Thompson says the results may indicate that consumers are starting to watch their spending in some areas now that interest rises are starting to be felt in bank accounts

Retail Trade over the upcoming summer holiday and Christmas period will be a very interesting data set to watch,” she says.

“For the RBA, this will give them some insight in to whether their attempts to cool the economy are working. If consumer behaviour does start to better reflect very negative consumer sentiment, then business sentiment is likely to start falling as well. For the business community, this means we are likely to start seeing more delayed or late payment activity, as businesses try to hold on to cash as long as possible.”

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