May retail sales record 4.2 percent year-on-year growth

Retail sales have recorded 4.2% year-on-year growth in May - bolstered by food, cafes, restaurants, and takeaway however, discretionary spending continues to soften.

According to figures released today by the Australian Bureau of Statistics (ABS), shoppers spent more than $35.5 billion across the country in May.

The most significant year-on-year sales increases were food spending (up 6.1%) and cafes, restaurants, and takeaway (up 12.7%).

Clothing, footwear, and accessories (up 4.0%), department stores (up 3.4%) and other retailing (up 2.2%) showed modest growth, attributed largely to cooler than average weather, and early promotional activity.

Household goods declined year-on-year by 4.4%, marking six months of negative sales growth.

All states and territories recorded growth year-on-year, led by ACT (up 9.0%) followed by South Australia (up 6.5%), Western Australia (up 5.7%), Northern Territory (up 5,2%), Victoria (up 4.7%), New South Wales (up 4.2%), Queensland (up 1.8%) and Tasmania (up 1.6%).

Australian Retailers Association (ARA) CEO Paul Zahra said sales growth for essentials like food is largely attributable to inflationary price increases.

"Food, dining out and takeaway are still predominantly driving overall retail sales growth and unavoidable price increases are a significant factor for those businesses," Mr Zahra said.

"We've now seen six months of spending decline on household goods, and we expect this will be a bellwether for most consumer spending in the months ahead.

"It's important to remember that cost-of-living pressures typically have a lag effect on retail - which is why we're seeing a gradual softening in spending.

"Clothing and department stores are still showing modest growth, but this is mostly driven by early promotional activity and cooler than average temperatures."

Mr Zahra reiterated that cost-of-living pressures, and a cost-of-doing-business crisis, remains the greatest concern for retailers.

"While we're seeing a softening in spending, retailers are simultaneously feeling the pressure from increasing operating costs across the board. We are now experiencing a collision between the cost-of-living crisis and a cost-of-doing business crisis"

CONTINUES