The ABS has revealed retail sales fell in December with discretionary spending down following a record November sales period.
The Australian Bureau of Statistics (ABS) has found Australian retail turnover fell 2.7 percent in December 2023 following a particularly strong November which saw a record breaking sales season. The fall in December was not offset by November’s turnover rise which was just an increase of 1.6 percent.
Year-on-year sales increased 0.8 percent for December, with shoppers spending $35.1 billion across the country on retail.
Most categories recorded growth, with the most significant year-on-year sales increases in department stores (up 3.7 percent), however Anneke Thompson, Chief Economist at CreditorWatch, expressed her concern over a fall in expenditure in discretionary spending.
“Not surprisingly, the biggest falls in expenditure were recorded in the discretionary spend categories, with household goods, department store and clothing, footwear and personal accessory retailing falling by 8.5, 8.1 and 5.7 percent respectively over the month,” said Thompson.
“Of further concern is the continuing fall in expenditure at cafes, restaurants and takeaway food services. Expenditure in this area is up only 1.6 per cent year on year, despite very strong population and pricing growth. Over the year to November 2023, prices for food & non-alcoholic beverages, alcohol, electricity & gas have risen by 4.6, 4.2, 10.7 and 12.9 percent respectively. Given these are all large cost inputs for cafes and restaurants, a 1.6 per cent increase in turnover overall means that overall profits in this sector are likely well down for many operators. The food and beverage sector, unfortunately, is likely to experience higher rates of business failures over 2024. The business failure rate in this sector is already the highest across all sectors, at 6.7 per cent as at November 2023.”
Next week, the RBA will have their first meeting of 2024.
Australian Retailers Association (ARA) CEO Paul Zahra said December’s results reflected projections that 2023’s Christmas spending would tread water as shoppers tighten their retail budgets.
“Throughout Christmas and the Boxing Day sales, we saw bargain-driven shoppers, who actively sought out the best deals and looked for value purchases.
“With household budgets under pressure, Christmas in 2023 was somewhat subdued compared to previous years – a result of cost-of-living challenges. We aren’t seeing the year-on-year growth that we did in previous years.”