Strong August retail sales as consumers keep spending despite cost-of-living challenges

The Australian Retailers Association (ARA) said that retail sales remain on a powerful trajectory, with trade increasing 25.1% in August compared to the same month last year, while sales are also up 27.4% compared to pre-pandemic levels according to the latest Mastercard SpendingPulse™, which measures in-store and online retail sales across all forms of payment.

Most retail categories recorded significant year on year sales growth as we continue to lap the 2021 Delta lockdowns. While Lodging was up 131.5% in August compared to 12 months ago, sales are down 5.5% compared to three years ago, highlighting a strong bounce back from last year’s travel restrictions but not quite a return to pre-pandemic levels.

Discretionary retail has recovered well from last year’s Covid impacts, with Jewellery sales up 107% in August compared to a year ago, Apparel up 83%, Electronics up 66.2% and Home Furnishings up 51.6%.

ARA CEO Paul Zahra commented that retail sales have strong momentum for now but cautioned there could be a slowdown in spending as we head into 2023.

“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. What’s pleasing though is that sales are also up compared to pre-pandemic levels across most retail categories,” Mr Zahra said.

“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 government’s fuel excise cut is also about to come to an end, adding further pressure to businesses and consumers.

“It’s incredible to see retail sales perform so well in the face of cost-of-living pressures, however the coming months could prove to be more challenging with household savings starting to erode and mortgage holders being squeezed even tighter,” Mr Zahra concluded.

Mastercard SpendingPulse August 2022

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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