Australian retail sales declined by 0.1% in December, a much more modest pullback than expected (-0.8%) post the November Black Friday sales as the timing of Cyber Monday sales fell early in the new month. Retail spending lifted by a solid 1.4% across the final quarter of 2024 - a sign that cost-of-living subsidies and the Stage 3 tax cuts are working - driven by the strongest lift in underlying volume demand (1.0%) since Q1 2022. Discounting during the various sales events saw retail price growth ease to 0.4% in Q4, the slowest quarterly increase since the comparable period in 2023.
December sales declined by a modest 0.1% on the prior month that was boosted by Black Friday sales (0.7%). In recent years (since the pandemic particularly), sales in December have typically seen sizeable declines (2020 -0.9%; 2021 -0.7%; 2022 -0.6%; and 2023 -1.5%) as households have brought forward purchases to November to take advantage of Black Friday discounting. This effect, though still evident, was much more modest in 2024. The ABS noted that Cyber Monday sales occurred in early December, underpinning a 1.6% rise in household goods (including electronics and furniture) that largely offset post-Black Friday declines in other categories. The chart below highlights this contrast in the profile of sales growth in December in 2024 compared with 2023 when all categories declined.
Despite weakening in December, retail sales still lifted by 1.4% in Q4, their sharpest quarter-to-quarter increase since Q3 2022. Notably, this was demand-driven with retail volumes advancing by 1.0%, the strongest outcome back to Q1 2022. Equally significant, volumes on a per capita basis (adjusted for population growth) picked up by 0.5% in the quarter - the first rise in the series in 9 quarters. Price discounting through Black Friday and Cyber Monday, as well as a material moderation in food inflation (1.2% to 0.4%), saw the retail price deflator ease to 0.4% in Q4.
The profile of retail volumes shows that discretionary categories led the way - volumes excluding basic food advanced by 1.5%q/q compared to the 1.0% lift in headline volumes. Household goods were the major driver (3.3%) with department stores (0.2%) and clothing and footwear 0%) subdued. Meanwhile, cafes and restaurants posted their strongest rise (1.2%) in more than 2 years. Volumes in basic food were up modestly (0.2%) coming off 3 consecutive quarterly declines.
