Australian retail sales lifted 1.9% in January, above market expectations for a 1.5% rise. This result followed a large decline in December (-4%) after Black Friday discounting boosted November sales ahead of Christmas (1.7%). A 2.9% rise in discretionary (or non-food) sales drove the rebound.
A similar pattern was seen last year, with January-22 sales rebounding by 1.8% after a pullback in December (-3.8%), though November-21 sales surged to a much greater extent (6.6%) as lockdown reopenings combined with Black Friday.
Overall, retail sales in January-23 were just below their level in September-22, with non-food sales around their July-22 level. This looks consistent with the sharp slowing in retail volume growth over the second half of the year (0.1%) from the first half (1.6%). Rising prices weighed on demand in the retail sector, though there was also a broad rotation in spending back to services occurring as the effects of the pandemic dissipated.
The one services-related category captured in the retail report - cafes, restaurants and takeaway services - reflected this shift in spending patterns, with volume growth holding up in Q4 (0.3%) compared to falls in goods-based areas such as household goods (-2%), clothing and footwear (-2.3%) and department stores (-2.9%).
In January, there were broad-based rises in spending. Department stores saw the strongest rise (8.8%) but that came after a much larger fall in December (-14.3%). The ABS noted spending on cafes and restaurants and takeaway services (1.2%) advanced to new record highs in the month supported by sporting and cultural events over the peak holiday period and rising prices.
