ARA forecasts inflation driven $66 billion Christmas spend

The Australian Retailers Association (ARA) has predicted a record breaking $66 billion spend in the Christmas trading period.  The ARA holiday sales predictions with Roy Morgan forecast a big spend in the lead up to Christmas. While this spend forecast is up 6.4 percent on last year, ARA CEO Paul Zahra sees these numbers as a reflection of price increases and inflation.

“These are great results, however, it’s important to acknowledge that price increases are a factor in these numbers and are also driving Australians to spend to get in ahead of inflation,” said Zahra.

Following this prediction, the RBA announcement today that interest rates were lifted by another 0.25 percent shows this is not set to slow. “The Board expects to increase interest rates further over the period ahead, but it is not on a pre-set course,” the statement from RBA read.

“It is closely monitoring the global economy, household spending and wage and price-setting behaviour. The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.” the statement said. “Household spending is expected to slow over the period ahead although the timing and extent of this slowdown is uncertain.”

The ARA notes that while a lot of the spend comes from inflation drivers, the holiday spend has shifted toward food and alcohol categories with in-person entertainment being a priority for the first time in a couple of years. Alcohol and food top the list of intended Christmas gift purchases for this year, followed by gift cards and toys.

“Aussies truly plan to eat, drink and be merry this Christmas. It’s no surprise we are seeing a shift towards food and entertaining with the holiday period over the past two years spent in the shadow of lockdowns,” said Mr Zahra. “The news couldn’t come at a better time for the hospitality sector who have endured more pain than most businesses through the pandemic.”

According to the ARA, NSW, Victoria and Queensland have driven most of the projected spike in spending. New South Wales is set to record a 20.8 billion spend, up 7.7 percent, followed by Victoria with 17.1 billion, up 5.2 percent, with Queensland spending predicted to top 13.5 billion, up 6.8 percent.

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