Australian retail sales posted another resilient outturn rising by 0.6% in August, advancing for the 8th month in succession. The support from accumulated savings and labour income continues to overcome headwinds from rising interest rates, high inflation and weak sentiment.
Retail Sales — August | By the numbers
- National retail sales advanced by 0.6% in August, unchanged from the preliminary estimate and above market expectations (0.4%).
- 12-month retail sales surged to 19.2% from 16.5%, with the base period coinciding with the Delta wave lockdowns in Sydney and Melbourne.
Retail Sales — August | The details
The 0.6% rise in headline retail sales was driven mostly by the food category (1.1%) as spending in the discretionary space (0.3%) took a backward seat. That profile is against the trend of what has played out so far in 2022 with discretionary spending (up 12.6%) outpacing the rise in headline sales (9.1%).
The food category saw broad-based increases across supermarkets (0.9%), liquor stores (1.3%) and specialised food (2.9%), driven partly by rising prices. The weak points in discretionary retail were clothing and footwear (-2.3%) and other retailing (-2.5%), the latter including components such as cosmetics and recreational goods. However, spending at cafes and restaurants continues to rise sharply (1.3%m/m), which is both a function of consumption patterns normalising post Covid and the underlying strength of household demand.
In the online segment, spending through the year so far is holding around a steady level averaging $3.7bn per month. In terms of market share, online retail is accounting for around 10.5% of monthly turnover, up from a pre-Covid level of around 7% in early 2020. The biggest uplift has been in the discretionary area (up 5-6ppts over the Covid period) compared to a smaller rise in food sales (up 2-3ppts).
Looking at the state details, New South Wales drove the increase in national turnover as the state posted a 1.5% rise in August following a 1.3% lift in July. South Australia (1.2%) saw a similar increase to the previous month, though Victoria (0.1%), Queensland (-0.1%) and Western Australia (-0.2%) all saw weaker outcomes relative to July. Spending in Tasmania picked up sharply (2.2%) with the state seeing its strongest rise for the year so far.
Retail Sales — August | Insights
Household spending was again resilient through August, albeit with a softer result from discretionary retail sales coming through. Households continue to spend despite rising interest rates, cost of living pressures and weak indicators of sentiment. A fall in household wealth associated with the declines in financial markets and property prices has also not deterred demand. The predominant factors appear to remain accumulated savings and the support to incomes from the strong labour market.