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Australian retail sales remained subdued in May 2024, with a modest increase of 1.7% compared to the same month last year – and most discretionary categories remaining in decline.

The latest data from the Australian Bureau of Statistics (ABS) revealed May’s retail spending totalled $35.9 billion nationwide.

Other retailing – including cosmetics, sports and recreational goods – saw the strongest growth in May (up 3%) year-on-year along with the staple category of food (up 3%). Cafes, restaurants and takeaway saw a modest increase (up 0.9%), along with household goods increasing modestly (up 0.1%) year-on-year after five months of consecutive declines. Clothing, footwear and accessories declined (down 0.2%) along with a drop in department store spending (down 1.7%) Both recorded year-on-year declines for the third consecutive month.

Overall growth was recorded by all states and territories year-on-year, led by Tasmania (up 4.4%) followed by Western Australia (up 3.5%), the Northern Territory (up 2.9%), Queensland (up 2.6%), Victoria (up 1.7%%). Marginal growth was recorded in South Australia (up 1.3%), ACT (up 1%) and New South Wales (up 0.4%).

Australian Retailers Association (ARA) Chief Industry Affairs Officer Fleur Brown said the continued decline of discretionary categories highlights the financial strain shoppers are feeling.

“Australians are doing it tough, facing an ongoing cost-of-living crunch and high interest rates. It’s no surprise these pressures are reflected in May’s retail trends, and it is concerning for retail,” she said.

“While food spending remains constant as a staple, there has been a shift towards more affordable and value-oriented products in recent months.

“The discretionary categories are being hit the hardest, as seen with household goods, clothing and department stores.

“Other retailing is the only standout performer in May, and that’s typically because beauty products are the last category to be affected by economic downturns,” Ms Brown said.

“The ongoing cost-of-living pressures, interest rate ramifications and increased cost of doing business make it a challenging period – particularly for those in the discretionary retail sector and small to medium size businesses.

“The ARA continues to call for targeted government support for vulnerable businesses. Retailers are not only contending with slow consumer spending and higher costs of doing business – they are also battling a retail crime wave, ongoing labour shortages and continued supply chain pressures alongside the most intense changes to our workplace relations system in more than a decade,” said Ms Brown.