Australian Retail Spending Rises 6% Amid Uneven Growth

Australian retail spending reached $27.92 billion in August, marking a 6% increase from the previous year. However, the growth was uneven, with some sectors declining in real terms due to inflation. Cafes, restaurants, and takeaway services saw the strongest growth at 8.43%, while discretionary spending weakened across clothing, footwear, recreational goods, food, and furniture.

Analysis by the Australian Retail Council (ARC) revealed that transport spending, particularly fuel, rose 8.1% month-over-month. Excluding fuel, household spending actually declined by 0.3%. ARC Chief Economist Glenn Fahey noted that the retail sector is increasingly operating as a 'two-speed economy,' with some industries thriving while others struggle.

Department stores and large online retailers grew just 0.8% year-over-year, meaning spending in this segment is falling in real terms when accounting for inflation. Fahey warned that higher fuel costs and elevated inflation are likely to strain business margins as retailers approach the critical Black Friday and Christmas periods.

Spending growth varied significantly by state, with the Northern Territory leading at 9.36%, followed by Western Australia at 8.17%. New South Wales recorded the highest total spending at $8.36 billion, while the Australian Capital Territory had the lowest at $455.40 million. Fahey also expressed concern that retail resilience could face further pressure after the Reserve Bank of Australia raised its cash rate by 25 basis points.