Australian retail sales increased by 1.1% in January, falling short of the 1.5% rebound expected after sales declined by 2.1% (revised from -2.7%) in December. Shifts in seasonal spending patterns have led to heightened volatility in the data, but the underlying momentum in retail sales looks soft.
January's 1.1% rise in retail sales came after a 2.1% pullback in December, which had followed a strong 1.5% lift in November driven by Black Friday sales. As noted in today's release, the ABS's seasonal adjustment processes are struggling to account for shifts in seasonal spending patterns that are now occurring at this time of year, leading to this run of highly volatile outcomes. On a 3-month average basis, sales to January were 0.2%, consistent with subdued household demand as cost-of-living pressures continue to constrain spending. In level terms, January sales ($35.7bn) were in line with their level in September-October.
At the category level, food spending was broadly flat (0.1%) in January following a 0.7% rise in December. Discretionary spending across all other categories rebounded by 1.8% from a 3.9% decline in the prior month. Within this, household goods (2.3%) and clothing and footwear (2.4%) saw similar increases, while department stores and other retailing were both up 1.7%. Cafes and restaurants (1.3%) posted their strongest outcome in 13 months, with the ABS attributing this to strong attendances at the various tennis events and BBL cricket across Australia in January.
