Retail sales in Australia saw a modest increase of 1.6% in February 2024 compared to the same month last year, as cost-of-living pressures continue to influence consumer spending.
The latest data from the Australian Bureau of Statistics (ABS) revealed February’s retail spending totalled $35.8 billion nationwide.
Clothing, footwear and accessories saw the strongest growth in February (up 4.0%), followed by department stores (up 3.7%), cafes, restaurants and takeaway (up 2.9%) and other retailing (up 2.7%).
Food trading saw modest growth (up 1.6%) whilst household goods again slumped into decline (down 2.2%).
Most states and territories recorded growth year-on-year, led by Northern Territory (up 3.5%), Queensland (up 2.5%), South Australia (up 2.4%), Tasmania (up 2.0%), Victoria (up 1.7%), Western Australia (up 1.5%), ACT (up 0.7%) and New South Wales (up 0.5%).
Australian Retailers Association (ARA) CEO Paul Zahra said whilst the pattern of low growth is concerning for retailers as they battle the increased cost of doing business, February’s retail sales results are in line with expectations.
“Australians are still cutting back on spending as the lag effect of interest rate rises continues to take hold. While food spending remained constant, there has been a shift towards more affordable and value-oriented products in recent months.
“The ongoing cost-of-living pressures and interest rate ramifications are making it a challenging period for those in the discretionary retail sector.
“Any growth that has been achieved is mostly being fuelled by the Australian population increases of 2.5% across the past year. We also understand that significant events like Taylor Swift concerts can go some way to stimulate spending,” Mr Zahra said.
Mr Zahra said pressures from higher costs of doing business continue for retail – from leasing, supply chain and energy costs to higher wages and the higher costs of goods and services.
The ARA welcomed the Reserve Bank of Australia’s latest decision to hold the cash rate in March and is hopeful the RBA may be on trajectory to cut rates from around mid-year.
“With inflation decreasing and retail expenditures weakening, a mid-year interest rate cut would certainly alleviate the pressure on the retail industry and Australian households,” he said.
