Australian retail sales declined for the first time in four months falling by 0.2% in October. This was weaker than the expected outcome (0.2%) but followed a strong rise in September (0.9%). October's decline was driven by a pullback in discretionary spending (-0.6%) as households delayed purchases ahead of Black Friday sales. Spending will likely accelerate in November - as has been the pattern in recent years - though it is a little early to be able to gauge the magnitude of this.
A 0.6% fall in discretionary-related spending drove retail sales to decline (-0.2%) for the first time since June. Declines across the discretionary categories ranged from -1% (clothing and footwear) to -0.4% (cafes and restaurants and 'other' sales). Many of these categories rose strongly in the month prior, with the release of iPhone 15, government energy rebates in Queensland for new appliances and warm weather supporting spending outdoors all factors. Food (0.5%) was the only category to advance in October.
In absolute terms, retail sales in October were 1.2% higher than 12 months ago whereas discretionary sales have contracted slightly (-0.2%). This spread reflects the pressures on household finances from high inflation and rising interest rates, resulting in discretionary-related spending being wound back. However, discretionary spending still remains at elevated levels.
