Inflationary issues, global turmoil, and five interest rate hikes in as many months haven’t driven Australian shoppers to put the brakes on spending as yet.
The latest Mastercard Spending Pulse survey revealed retail trade increased 25.1 per cent in August, compared to the same month last year, with sales up 27.4 per cent where compared to pre-pandemic levels.
Discretionary spending continues unabated, with consumer electronics sales up 66.2 per cent and home furnishings up 51.6 per cent, while jewellery sales jumped 107 per cent, and apparel leaped 83 per cent.
This is particularly good news for the likes of JB Hi-Fi and Harvey Norman, both of whom were tipped to avoid a Christmas spending slowdown this year by UBS analysts.
Spending on accommodation is also up 131.5 per cent compared to 12 months ago, not surprising given the travel restrictions in place last August.
The Australian Retailers Association warns these strong sales cannot last, and will no doubt lead to a 2023 spending slowdown.
“In August last year, our two largest states were in lockdown, so it’s not surprising to see discretionary retail categories record such significant growth compared to 12 months ago,” ARA CEP Paul Zahra points out.
“What’s pleasing though is that sales are also up compared to pre-pandemic levels across most retail categories.
“While consumer spending is strong for now, the concern is that we haven’t seen the full impact of the interest rate hikes hit household budgets.
“According to the government, inflation is also yet to reach its forecast peak, so we could see a softening of sales as we head into 2023.
“While the retail sector is performing well overall from a sales perspective, the results remain uneven with small businesses more acutely challenged by inflationary impacts and rising costs associated with fuel, energy, supply chains and rent.”
The Australian Bureau of Statistics recently showed an 18.4 per cent rise in household spending, year-on-year.
This marked the seventeenth month in a row that saw a year-on-year increase in total household spending.
The cliff must be coming soon.
