Australian retail sales rose 1.2% in April 2024. To adjust for the noise of the timing of Easter we also look at the combined March-April results which shows sales growth of only 1.3%. Department stores and fashion have had the most notable slowdown over the Easter trading period. Supermarket sales are also soft considering data suggests higher inflation in March-April. We forecast subdued retail sales growth trends to continue to June 2024, with a mild pick up for the back-half of calendar 2024.

We have updated our retail sales outlook, with modestly higher forecasts for 2024. We forecast 2.7% growth (up from 2.5% previously). We have lifted our non-food forecasts, but lowered food & liquor forecasts. The prevailing sales trends are very soft but should improve in the back-half of calendar 2024 as income tax cuts flow through. We only see a modest pick up because lower retail price inflation will constrain overall sales growth in FY25e.

Back in July 2022, the wage determination for the Australian General Retail Award resulted in wage increases of 4.6%-5.2% for employees, with an additional boost from higher employer superannuation contribution. What will the next wage determination bring? Historically, we have typically seen retail wages rise slightly more than inflation. If that is the case, we think retail wages growth may be around 5% again for the 12 months starting 1 July 2023. This will be good news for employees, but a challenge for retailers as sales growth starts to slow.