7.5 percent YoY retail sales growth, turnover fails to keep up

The ARA has reported a 7.5 percent growth in retail sales YoY for December 2022. This marks 16 consecutive months of year-on-year growth for the retail sector. While year-on-year figures are looking positive for the industry, the Australian Bureau of Statistics (ABS) has released data today that shows Australian retail turnover fell 3.9 percent in December 2022. According to Ben Dorber, ABS head of retail statistics, “this is the first monthly fall in retail turnover for 2022, following eleven consecutive monthly rises. Retail turnover remains elevated at its sixth highest level in the series and was up 7.5 per cent through the year.”

“The large fall in December suggests that retail spending is slowing due to high cost-of-living pressures. Retail businesses reported that many consumers had responded to these pressures by doing more Christmas shopping in November to take advantage of heavy promotional activity and discounting as part of the Black Friday sales event.”

December 2022 saw YoY sales increases of over 25 percent for food services such as cafes, restaurants, and takeaway. The whole country saw this uptake, with South Australia leading year-on-year growth up 10.9 percent. This is followed by New South Wales up 9 percent.

Australian Retailers Association (ARA) CEO Paul Zahra said whilst the results remain impressive for retail, the margin between inflation and sales growth is narrowing.

“Today’s data marks 16 consecutive months of year-on-year sales growth, which is an enormous achievement for retailers considering the disruption and challenges of the past few years,” Mr Zahra said.

“When you combine the strength of the record November retail sales, predominately driven by the success of Black Friday/Cyber Monday with December retail sales, this would account for a record holiday trade of $70.3 billion.

“Australia saw a bumper Boxing Day spending spree, which bolstered sales to notch an impressive year-on-year increase.

“December’s results remain strong in the face of adversity, with economic headwinds proving to be a hurdle. With inflation hitting a post-1990 peak, it appears to be driving a significant proportion of sales growth.”

The ARA reported earlier this month that the December quarter saw The Consumer Price Index (CPI) rise 1.9 percent, equating to an annual rise of 7.8 percent in the twelve months to the December 2022 quarter. According the the ARA, the past four quarters have seen strong quarterly rises off the back of higher prices for food, automotive fuel and new dwelling construction. The Reserve Bank is set to meet next week and are expected to potentially lift interest rates once again.

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