The Australian Bureau of Statistics (ABS) have released January retail sales figures showing significant growth, with industry experts cautioning these sales increases reflect rising costs.
According to figures released today by the Australian Bureau of Statistics (ABS), retail sales saw an increase of 7.5 percent in January. This was an impressive spending increase of 1.9 percent month on month, following a 4 percent fall in December, but experts say this is mostly attributable to rising costs and changes in usual consumer spending patterns, not a cause for celebration.
ABS head of retail statistics Ben Dorber understands the popularity of Black Friday sales and growing cost of living pressures combined to drive a change in usual consumer spending patterns.
According to the ABS statistics, shoppers spent more than $35 million across the country. There were significant year-on-year sales increases for food sales with cafes, restaurants and takeaway up 26.3 percent. Back to school shopping fuel department stores (up 16.6 percent) and clothing, footwear and accessories sales (up 17.5 percent).
The only category to show decline year-on-year was household goods, with sales down 1.1 percent.
Australian Retailers Association (ARA) CEO Paul Zahra cautioned that whilst the sales results remain impressive, the cost of doing business and gross margins for many retailers remains a serious concern. “Today’s sales data is a strong result, particularly for apparel traders and department stores who have worked hard to clear their summer inventory,” he said. “There’s no doubt that an impressive Boxing Day trade certainly bolstered these sales, with the shoppathon a fixture on the January calendar.
“The sales recorded by restaurants and cafes are particularly strong – and it’s clear the appetite for dining out has been boosted after the challenges of the pandemic.”
Also commenting on these sales statistics, National Retail Association CEO Greg Griffith said the slow start to the year was expected as the impact of rising interest rates adds further strain to household budgets. “January typically is one of the most seasonal months for retailers, and while growth for the month reflects a small increase, spending has grown by 7.5 per cent compared to this time last year. While spending would have been slightly higher in January, we think it’s more likely that we’re seeing inflated costs hidden in the data, rather than volumes,” he said.
“Retailers and shoppers are balancing their needs with economic uncertainty as best as they can, and the sales data reflects that. The retail sector has bunkered down for slow spending from this month onwards until inflation is tipped to decline later this year. With the string of interest rate rises that will continue in the months, we will likely see retailers pass on their increased costs on to consumers,” he said.
Mr Griffith emphasised that retailers are dealing with a myriad of issues unique to the sector.
“Adding further to the strain, we are still faced with a labour shortage and have seen a drastic increase in retail crime across the country. These issues all contribute to the squeeze on retail spend and growth,” he said.
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