Consumer spending for May remained upbeat in the face of inflationary pressures and rising interest rates, with sales increasing 7.8 per cent compared to May 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, apart from apparel which declined 0.2 per cent. Fuel and convenience recorded the largest increase in sales (up 7.4 per cent), followed by electronics (up 5.6 per cent), home furnishings (up 4.4 per cent), groceries (up 4.1 per cent), lodging (up 3.5 per cent) and jewellery (up 1.6 per cent).
Australian Retailers Association (ARA) CEO Paul Zahra says whilst it’s pleasing to see retail sales continue their positive trajectory across most categories, we are entering a challenging economic environment.
“A generation of homeowners are experiencing their first interest rate hikes, while the cost of food and essentials are going up which is impacting family budgets,” he explains.
“However, we’re yet to see these cost pressures impact retail spending, which is a positive indicator that Australians in the short term will be able to withstand the current inflationary challenges.
“Household savings remain above pre-pandemic levels which is cushioning the blow from the rising prices we’re seeing across the economy. Whilst discretionary purchases are likely to be impacted as the cost-of- living challenges continue, we remain optimistic that overall consumer spending will remain reasonably upbeat for most of the year.
“Right now, retailers are experiencing one of their busiest months of the year with the mid-year sales in full swing, which the ARA forecast will result in an $8.8 billion spending boost as consumers snap up bargains and retailers clear out their excess stock. Despite the current positive trajectory of retail sales, we also acknowledge that many businesses are confronting some record cost pressures which is impacting their performance.”