Consumer spending continued its strong trajectory in June, with sales up 11.1% compared to the same month last year, according to Mastercard SpendingPulse™, which measures in-store and online retail sales across all forms of payment.
All categories of retail recorded year on year sales growth led by Fuel and Convenience (up 23.1%), Jewellery (up 23.2%), Lodging (up 17.9%), Home Furnishings (up 6.5%), Electronics (up 4.8%) and Apparel (up 2.4%).
Australian Retailers Association CEO Paul Zahra said while sales are increasing, it is not a full reflection of sector performance with rising labour costs, rents, fuel and energy costs and supply chain constraints all adding to the cost crunch for business.
“The performance of the retail sector is not just marked on sale volumes. We are operating in an inflationary landscape, where consumer prices are increasing, which impacts overall retail trade numbers. This is creating a perception that the sector is thriving. However, many businesses are severely challenged by rising operating costs associated with labour, fuel, energy, supply chains and rents,” Mr Zahra said.
“While consumers are impacted by the rising cost of living, the rising cost of business is in many cases more severe. The economic outlook also has many business owners feeling nervous, as rising interest rates begin to take hold and some natural belt tightening occurs with mortgage holders. The household savings rate remains above pre-Covid levels, which will cushion some of the inflationary impacts consumers are experiencing. However, when people rein in spending, discretionary purchases are the first things they cut out,” Mr Zahra said.
“We remain optimistic the retail sector will be able to weather the current economic headwinds and the rising cost challenges. However, we need to acknowledge that just because overall sales are up, it does not necessarily mean that retailers are doing well. As they have through the pandemic, many retailers continue to reduce inflationary shocks for their customers by absorbing some costs, which of course affects their margins. And passing on cost increases has impacted their volumes,” Mr Zahra said.
Mastercard SpendingPulse June 2022
|SECTORS (TOTAL SALES)||NOMINAL SALES GROWTH|
|June 2022 vs June 2021
(Year on Year)
|Fuel and Convenience||+23.1%|
|TOTAL AUSTRALIA RETAIL SALES||+11.1%|
Mastercard SpendingPulse™ reports on national retail sales across all payment types in select markets around the world. The findings are based on aggregate sales activity in the Mastercard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and check. As such, SpendingPulse™ insights do not in any way contain, reflect or relate to actual Mastercard operational or financial performance, or specific payment-card-issuer data.
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About us: The Australian Retailers Association (ARA) is the oldest, largest and most diverse national retail body, representing a $360bn sector which employs 1.3 million Australians and is the largest private sector employer in the country. As Australia’s peak retail body, representing more than 100,000 retail shop fronts and online stores, the ARA informs, advocates, educates, protects and unifies our independent, national and international retail community. To learn more about ARA’s exclusive member benefits and more, visit retail.org.au