Australian retail sales rose 5.3% for August 2026 on the same month a year ago. Once again, retail sales growth remains above long-term average. The only exception in August was weakness in department stores and discount department stores. Other discretionary categories like household goods, clothing, restaurants and cafes were all above trend. The extent of the sales strength will embolden the RBA to raise rates and slow pending. While sales trends are bound to slow, the downturn is likely to remain gradual. We remain cautious about the December 2026 quarter and expect a soft 2027 as well.

What we’re hearing and seeing in retail

• Sales growth trending lower but September may be better: The retail feedback remains highly varied, a sign of slowing demand. Generally, we have had better feedback on September than August 2026.
• Petrol prices a worry: Petrol prices are up 45 cents per litre year-on-year, which is likely to be a 1.2% drag on retail sales growth.
• RBA needs to see slower demand: The RBA has a tightening bias on interest rates given inflation and demand is too strong. Retail sales is trending at 5.6% over the past three months and will need to slow to near 4% to satisfy the RBA.

Sub-sector insights

• At-home food and liquor: At-home food & liquor sales rose 4.1% in August down from 5.6% in July. Sales trends were weaker in both supermarkets and liquor based on our feedback.
• Cafes, restaurants and takeaway food: Sales growth slowed to 6.6% in Augst from July’s 9.4% growth. Collins Foods reported KFC Australia comparable sales for July/August +2.9%.
• Household goods: Household goods sales accelerated to 6.0% in August 2026. Adairs sales in July and August were flat with Mocka up 15%. Focus On Furniture improved from July & August at -27.6% to -2.7% in September 2026.
• Dept & Discount dept stores: Sales slowed from 3.4% in July to 0.9% in August. For Myer Retail, comparable sales over August & September were 1.8%, but total sales fell 1.9% given stores under refurbishment.
• Clothing & footwear: Clothing & footwear growth slowed to 5.2% from 7.1% in July but remains above the 10-year average of 4.4%. Kathmandu grew 7.4% from the end of July to mid-September with Rip Curl up 4.0%.
• Other retailing incl pharmacy and recreational goods: Insights from bank transaction data suggest strong sales continued in pharmacy. There is weaker feedback on sporting goods and outdoor.
• Online spending: Our retail feedback suggests online marketplaces have continued to strengthen. Despite slowing digital traffic trends, conversion is up. Growth rates are hovering close to double-digits overall. Food is stronger online than non-food.
• Consumer spending: Discretionary spending has outpaced non-discretionary for four consecutive months. August 2026 grew 6.8% and 6.2.% respectively. Transport costs grew fastest at 11.8% due to higher petrol prices.