Australian retail sales rose 4.7% year-on-year for December 2025. This was a solid end to the year and the December quarter showed growth of 5.8%, which was above trend. It is important to call out the strength of non-food, which was 7.1% across the December quarter, an unusually strong result. We believe we have just seen the peak in retail sales growth, with a gradual slowdown over 2026 likely.

Australian retail sales rose 6.9% year-on-year in November 2025 according to ABS data. The shift of ABS data source does makes us cautious about the magnitude of the reported strength in sales. Even so, it does suggest another strong month in non-food. Household goods such as furniture, electronics and hardware, had the strongest growth up 10.6%. At-home food and liquor was weakest at 3.6% growth.

Australian retail sales rose 6.2% in October 2025 year-on-year, a surprise given our feedback of modest spending in October in what felt like anticipation of Black Friday deals. The theme of a strong consumer continued from the National Accounts update for the September quarter in which household income was revised higher. Higher house prices and improved savings rates are buffering the consumer with sentiment trending higher.

Australian retail sales rose 4.7% in September 2025 year-on-year, an improvement on August 2025 trends. Growth was stronger across all retail categories. While the RBA has paused on further rate cuts, house price growth looks to be accelerating, which is supportive of better retail sales growth. It should be a decent Christmas for most retailers, just watch for the levels of discounting.

Australian retail sales only rose 3.1% in August 2025, a slowdown from the 5% trendline seen in the previous three months. The slowdown was broad-based, albeit café & restaurant spending remained strong at 6.4% growth. While the slowdown may raise some concern, we see the sustainable trend level around 4% growth and hence a softer month for August and September is likely. Consumers are bound to wait till Black Friday to spend up again.

New Zealand has been a challenging retail market for most companies over the past 18 months. However, there are clear signs retail sales are likely to improve. Rate cuts of 250bp that began in August 2024 are starting to boost incomes and recent sales trends have been stronger. We expect NZ retail spending to rebound to 3.6% growth in FY26e, up from 0.6% growth in FY25. The three retailers with the largest sales exposure and upside to better NZ sales trends are Ampol, Harvey Norman and Bapcor.  NZ could account for 2%-3.5% in operating profit growth for these companies.

The latest household spending indicator (replaces Retail Sales series) showed retail sales growth of 4.8% for July 2025, up from 3.8% in June 2025. The strongest growth was in “other” retailing, which includes online pure-play, pharmacy and recreational goods. Department stores had a surprisingly strong result and household goods was solid too. We expect growth rates to hover close to 4% over the remainder of 2025.

Australian retail sales finished fiscal 2025 with 4.6% growth for June 2025, the strongest growth in over two years. The standouts were online, recreational goods, pharmacy, cosmetics and electronics. Liquor, cafes & restaurants and supermarkets were all laggards. The strong finish to the year partly reflects end of financial year sales. Retail spending for FY25e was up 3.3% and we see 3.9% growth for FY26e.

Australian retail sales rose 4.1% in May 2025 year-on-year. This is an acceleration on the combined March-April growth of 3.6%. Foot traffic data for May reported growth of 8%. Pharmacy, beauty, recreational goods and online were strongest in May. Weaker categories were liquor, cafes & restaurants and furniture, albeit all were positive in the period.

The National Accounts results make for stimulating reading for consumer-facing businesses because household income growth has accelerated at the same time as cost of living pressures have eased. Financial conditions are good. The March 2025 quarter showed household income growth of 6.7% with consumer spending rising 4.2%. Households are now saving 5.2% of their income. The dilemma in our mind is whether conditions accelerate from here. We expect the rate of retail sales growth, currently trending at 4%, to persist over the next 12 months. While interest rate cuts will help, a slowdown in population and lapping the income tax cuts means income growth is actually likely to slow a little, making it hard to see an acceleration in retail sales growth.