Annual retail spending data shows a slowdown in household spending, amidst mortgage and cost of living pressures, and subdued consumer sentiment as retailers prepare for the upcoming peak season trading period.
Australian Retail Council (ARC) analysis of Australian Bureau of Statistics Household Spending Indicator data shows retail spending increased 4.9 per cent over the year to September, reaching $39.91 billion, down from 5.6 per cent annual growth in August.
Growth remains uneven across the industry, with other retailing (+8.1%) – which includes pharmaceutical and cosmetic retailing – and cafes, restaurants and takeaway food services (+7.4%) recording the strongest annual increases.
Food retailing recorded particularly subdued growth of just 3.3 per cent over the year, which nearly fully accounted for the 3.2 per cent increase in food and non-alcoholic beverage prices, as reported by the September CPI release. Spending in department stores and large online retailers (+1.7%) also continued to lag the broader sector.
Australian Retail Council Chief Economist Glenn Fahey said the slowdown in spending was concerning, with the latest figures suggesting that deteriorating consumer confidence was beginning to weigh on retail activity.
“Today’s figures suggest retail spending is beginning to reflect the weakness in consumer confidence we’ve been seeing for some time.
“Consumer sentiment fell sharply in September and deteriorated further in October, suggesting the pressure on household spending is unlikely to ease in the months ahead.”
Mr Fahey said the Reserve Bank’s latest forecasts reinforced concerns about subdued household spending heading into the peak trading season.
“The Reserve Bank has downgraded its forecasts for household consumption growth in both the second half of 2026 and the first half of 2027, with spending now expected to grow by just 1.4 per cent over the year to both December and June, down from 1.6 per cent previously.”
“This weaker outlook, combined with yesterday’s interest rate increase, comes at a particularly difficult time for retailers, with Black Friday sales and the crucial Christmas trading period fast approaching.
“Retailers are working hard to keep prices affordable. Clothing and footwear prices have risen just 0.4 per cent over the past year, while prices for furnishings, household equipment and services have increased just 0.8 per cent, compared with headline inflation of 4.3 per cent.”
Retail spending by industry group — September 2026 compared with September 2025:
Retail spending by state and territory — September 2026 compared with September 2025:
About us: Australian Retail Council (ARC) represents a $444 billion sector that employs 1.4 million Australians across metropolitan, regional, and remote communities – making retail the largest private sector employer in the country and a significant contributor to the Australian economy. Our membership spans the full spectrum of Australian retail, from family-owned small and independent retailers that make up 95% of our membership, through to our largest national and international retailers that employ thousands of Australians and support both metropolitan and regional communities every day.
