New figures released today show Australia’s retail turnover saw an increase of 0.6 percent in August, making it the eighth consecutive month to see such growth.
The retail figures released by the Australian Bureau of Statistics today particularly showed increases in spending on food as the primary drivers for the increase. When compared with the monthly results of one year previous, August recorded a total rise of 19.2 percent, seemingly reflecting ongoing retail growth and stable consumer confidence levels even despite ongoing cost of living pressures in Australia and around the world.
Interim Chief Executive for the National Retail Association Lindsay Carroll suggests, however, that the run of increases may not actually reflect increased appetites for spending but more accurately be as a result of the cost of living pressures forcing households to spend more – and retailers to charge more – out of necessity.
“Food related industries saw the largest increase, with cafes and restaurant services rising 1.3 per cent and food retailing by 1.1 per cent,” Carroll said in a statement, “Without much growth occurring in the non-food related industries, it’s clear consumers are spending because of the impact inflation is having on food prices in particular.”
Carroll’s counterpart in Australian Retailer’s Association CEO Paul Zahra was less tempered in his response to the rises, saying, “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.”
“Having said that, we remain cautious about the economic outlook,” Zahra continued, “There is likely to be a lag effect from current inflationary conditions. We haven’t seen the full impact of the RBAs interest rate increases flow through the economy, and inflation is yet to reach its forecast peak, so we could see a softening of sales as we enter 2023.”
The figures come following results published this week by ANZ-Roy Morgan showing a climb in consumer confidence, up 1.8 points to 87.8 overall – the highest result since late May.
“While confidence was still well below the neutral level of 100, at least two of the five confidence subindices exceeded 100 for the first time since early March,” said ANZ Senior Economist Catherine Birch, “The increase in headline confidence was mainly driven by improved sentiment around Australia’s economic conditions.”
Despite this rise, CreditorWatch Chief Economist Anneke Thompson suggested the retail figures for August did nonetheless demonstrate important changes in consumer behaviours, warning, “There was some downward movement in discretionary spend categories, with clothing, footwear and personal accessory as well as other retailing recording falls in turnover month to month. This 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.”
This decline in discretionary spending could also be a reflection of household saving trends, as identified in a survey by asset finance brokers Savvy published last week, showing 24 percent of Aussies saving less than $250 per month on top of 19 percent reporting not being able to save money regularly.
Overall, the latest figures from the ABS deliver mixed results for retail in Australia, suggesting spending is continuing to grow – but perhaps only so far as costs are continuing to rise, with discretionary spending increasingly the casualty of the developing cost of living crisis.
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