Australian retail sales lifted by 0.2% in August, disappointing expectations (0.3%) and slowing from a 0.5% rise in July. Discretionary-related sales at 0.5% month-on-month outperformed the headline result, boosted by the FIFA Women's World Cup and Afterpay sales promotions. Annual growth in retail sales has eased back to 1.5%, underpinned by rapid post-pandemic population growth of above 2% according to the various estimates.
Soft trends in retail sales continued in August, with turnover slowing to a 0.2% rise and flatlining on a 3-month average basis. Cost-of-living pressures and higher interest rates are constraining spending, as the June quarter national accounts confirmed recently. That said, discretionary sales have posted gains of 0.9% in July and 0.5% in August. This has been supported by the Women's World Cup and it will be interesting to see if the domestic football finals can have a similar effect on September sales. Beyond that, discretionary spending could cool in October as households wait for Black Friday sales to come around in November.
Looking across the board, the main weakness was in basic food (-0.3%) after a modest decline in the prior month (-0.1%). Household goods contracted a further 0.4% to be down 6.6% over the year, reflecting the post-pandemic rotation in spending to services.
The boost from the Women's World Cup came through in clothing and footwear (1.3%) - on the back of spending on supporter gear - and cafes, restaurants and takeaway food (0.7%) - as Australians watched the tournament at venues, live sites and private gatherings. The 'other' retailing category (of which pharmaceuticals are a large component) lifted 0.7%m/m and department stores saw a 0.4%m/m rise, moderating from a rebound in July (3.6%).
