Australian retailers are gearing up for a $64 billion holiday season splurge, despite inflation and ever-rising interest rates.

If correct, this would see holiday spend across the country up three per cent on last year’s Christmas period. Pre-pandemic spend in 2019 was $52.9 billion.

Department store spending will hit $3.4 billion, up from last year’s $3.2, while spending on household goods will jump to $11.6 billion, from $11.3.

This is according to new research conducted by the Australian Retailers Association, Roy Morgan and Salesforce, who found that shopping will start early this year, as consumers race against inflation.

“Generally there is a sense of prosperity and that is what you want to see,” said ARA CEO Paul Zahra.

“It’s really hard to explain the customer psyche right now other than they have continued to spend.

“The savings ratio is still high compared to pre-pandemic levels, so they are working through their savings, and while the world has opened up travel costs have gone through the roof so it is about 30 per cent more to travel overseas.

“All of a sudden that annual European holiday becomes a trip to the Gold Coast and they are spending that money locally.”

Zahra has previously warned that lack of staffers may also hamper holiday spending.

“Retailers have already begun their recruitment drives for tens of thousands of additional Christmas casuals to cope with demand,” he said.

“However with the scale of the labour crisis getting worse for retail, it’s unlikely that businesses will be able to fill all the roles they have available to trade at their full potential.”

Consumers are expected to roll through Christmas, and pull back spending in early 2023.

“There was plenty of concern earlier in the year that the RBA’s decision to increase interest rates at the fastest rate since 1994 would severely dent retail sales during the closing months of the year,” said Roy Morgan CEO Michele Levine.

“The strength of the Australian consumer is set to power through these challenges.”