After Harvey Norman and JB Hi-Fi reported soft sales in January resulting in a slump in shares, Australian Retail Council has reported that the market overall only grew 5 per cent YOY in January.

New data from the Australian Bureau of Statistics shows Australians spent A$38.63 billion across retail in January 2026, compared with A$36.79 billion in the same month last year. The figures indicate moderate growth in household spending despite ongoing cost-of-living pressures affecting consumers across the country.

Retail activity increased across all major categories. Cafés, restaurants and takeaway food services recorded the strongest growth at 8.7 per cent year-on-year. Other retailing rose 7.8 per cent, while clothing, footwear and personal accessories increased 6.1 per cent.

More modest gains were seen in household goods retailing, which rose 4.1 per cent, while department stores and major online retailers recorded growth of 3.7 per cent. Food retailing grew by 2.8 per cent over the same period.

Growth was relatively consistent across the states and territories. Western Australia led with a 6.2 per cent increase, followed by Queensland at 5.9 per cent. South Australia recorded 5.1 per cent growth and New South Wales rose 4.7 per cent. Victoria increased 4.4 per cent, Tasmania 4.6 per cent, the Northern Territory 3.7 per cent and the ACT 2.8 per cent.

Australian Retail Council Chief Economist Glenn Fahey said the data suggests households are still spending but remain cautious with their budgets.

“January retail spending shows Australian households continue to spend carefully, with steady growth across all categories following the peak trading season,” Mr Fahey said. “Consumers remain highly price-sensitive and are prioritising value as they manage ongoing cost-of-living pressures.”

Mr Fahey noted the figures were recorded before several developments that could influence consumer confidence in the months ahead, including the Reserve Bank’s February interest rate increase and rising geopolitical tensions in the Middle East.

He warned that sustained increases in global oil and energy prices could place further pressure on inflation and household budgets.

Retailers are also dealing with increasing operating costs across wages, energy, logistics and rent while attempting to keep prices competitive for customers.

In its pre-Budget submission, the Australian Retail Council has called on the Federal Government to reduce regulatory burdens and improve productivity across the sector.

Retail currently employs more than 1.4 million Australians and remains one of the country’s largest industries, making consumer spending trends a key indicator of the broader economic outlook.