Australian retail sales opened 2025 rising by 0.3% month-on-month in January, matching market expectations. Supermarket sales and dining out over the holidays supported by large attendances at the Australian Open and cricket matches around the country were key contributors. Today's report indicates that retail sales had decent momentum leading into the RBA's February rate cut.
Headline retail sales rose 0.3% (seasonally adjusted) across the month in January, rebounding after sales had pulled back in December (-0.1%) following the Black Friday boost in November (0.7%). Smoothing out the volatility, sales averaged a 0.3% increase over the past 3 months. Momentum in retail sales has been consistent around this sort of pace since the middle of 2024 (see chart below) as the Stage 3 tax cuts and cost-of-living fiscal support measures came into play. It will be interesting to observe if there is a discernible impact from the RBA's first rate cut in 4 years in February.
The composition of sales growth in January was supported by a range of categories. Basic food rose 0.7%m/m as supermarket sales increased at their fastest pace (1.0%) since November 2022, helped by supply chain disruptions in Victoria easing. Cafes and restaurants were up 1.1% - rising to a 1.9% increase if catering services are included - with the ABS highlighting the boost from crowds attending the Australian Open and cricket matches. Clothing and footwear sales also advanced (2%), rebounding from a post-Black Friday pullback in December (-1.7%). Meanwhile, 'other' retailing lifted in January (2.4%) driven by gains in recreational goods (5.3%) and pharmaceuticals (2.3%). The one area of weakness was in household goods, falling 4.4% month-on-month - their sharpest decline since December 2021 - as spending on furniture (-4.9%) and electrical goods (-8.2%) unwound following strong rises in December.
Turning to the states, sales fell in New South Wales in January (-0.3%) - the first decline there in 6 months - but rose in all other states. Gains ranged from 0.4% (Queensland and Western Australia) to 1.1% (Tasmania). Annual growth is fastest in Western Australia at 5.5% and slowest in New South Wales at 2.3%.
