Australian retail sales rose 1.2% for January 2024. Half of retail categories were in decline, including notable declines in furniture, electronics, footwear and recreational goods over the month. Trading updates from a number retailers highlight stabilisation in sales trends, but at a weak level of growth. We expect subdued sales trends to persist over the next four months.

Australian retail sales only rose 0.3% for December 2023. If we average November and December, given the Black Friday pull-forward, growth was still a weak 1.1%. The additional detail for December highlights a consumer that is increasingly cautious. Café & restaurant sales were particularly weak, along with liquor and all household goods categories declined.

Australian retail sales for November rose 2.1%. Black Friday promotions drove improvements particularly in electronics, department stores and furniture. Online food and non-food were both positive, with online food strength growing double-digits. While there are concerns about a pull forward of sales into November, our feedback suggests December sales held up reasonably well.

Australian retail sales for October 2023 rose 1.3%. Category variability continued with dining out resilient and weakness in furniture, electronics and recreational goods. Supermarkets slowed as fresh deflation dented sales. The expectation of Black Friday sales in November likely gave consumers a pause during October in some discretionary categories. Our feedback on November sales and Black Friday have been stronger.

Australian retail sales for September 2023 rose 2.1%. The additional detail on volumes highlights the magnitude of the weakness more clearly. In the September 2023 quarter, retail volumes fell by 1.8% and on a per capita basis were down 4.3%. The volume reset is a necessary step in the retail cycle reflecting outsized volumes during COVID-19 and weaker income growth. We are approaching a trough in retail sales growth in our view, but we don’t see any meaningful recovery until late 2024.

Australian inflation rose 5.4% in the September 2023 quarter, with our calculation for retail price inflation at 3.4%. Retail inflation has slowed significantly in some categories, particularly food, furniture, auto parts and sporting goods. The lower inflation reflects lower input costs flowing through and may be supportive of gross margins against a backdrop of rising operating costs such as wages and rent. Even so, it is likely that inflation fades further and is another headwind for nominal sales growth near-term given volumes are also sluggish.

Australian retail sales grew 1.9% for August 2023 on the prior corresponding month. The additional detail provided by the ABS revealed very weak sales in electronics, furniture and recreational goods. Non-food online went backwards too. Supermarket sales dipped to 4.5% growth, driven by deflation in fresh categories. We are approaching the trough in retail sales over the next few months. Even so, any recovery in 2024 may be longer-dated and weaker than hoped until tax cuts take effect later in that year.

Australian retail sales grew 1.4% for July 2023 on the prior corresponding period. The detail provided by the ABS showed very weak sales in electronics, furniture and recreational goods. Non-food online was likewise soft. Some of the growth categories have also eased back, such as supermarkets and restaurants & cafes. The downturn is broadening and we are likely to see further weakness in retail spending over the next six months.

Australian retail sales increased 3.0% in June 2023. The notable swings for the month were a moderation in the sales decline for electronics but a sharper slowdown for fashion and department stores. The downturn is spreading to more categories and will continue through to late this calendar year. The data also reveals that retail volumes per capita declined by 3.4% in the June 2023 quarter. Elevated price inflation is propping up spending and will fade later this calendar year in non-food and by mid-2024 in food.

Australian retail sales rose 4.3% in May 2023, which is a solid run-rate and propped up by food categories. The declines in electronics and furniture actually eased off a little. Our barometer of the consumer’s willingness to spend remains very strong with café & restaurant sales up 15%. Retail spending has not fallen of the cliff, but volumes are weak and demand is likely to continue slowing right through 2023 and the first-half of 2024.