Consumers continued their spending spree into March, with trade increasing 9.4 per cent compared to the same time last year and increasing 1.6 per cent compared to the previous month, according to the Australian Bureau of Statistics (ABS).
Australians spent $33.6 billion in stores and online in March, which according to Australian Retailers Association (ARA) CEO, Paul Zahra, is a great result. However, spending challenges loom for the months ahead as cost-of-living pressures begin to impact family budgets.
“We’re in an uncertain economic environment, with cost-of-living pressures starting to bite and interest rates rising for the first time in over a decade,” he says.
“Whilst the top line performance of retail trade is strong, consumer confidence has fallen significantly this week and we could see more subdued levels of consumer spending in the months ahead as people start to tighten their household budgets.”
Household goods had a 11.3 per cent year on year sales increase, with most other categories also recording positive growth.
While these March figures are encouraging, National Retail Association (NRA) CEO, Dominique Lamb, adds that the looming increases in interest rates, superannuation and award wages represent a very unwelcome triple whammy for business owners.
“We would be very concerned if the Reserve Bank board were to use these figures as justification for a further rates hike in June,” she says.
“We think they need to wait and see how the recent increase affects the May retail sales results before they move again.”
Zahra adds that despite the increased pressure that’s set to be placed on family budgets in the coming months, he is expecting sales to remain reasonably robust given the high savings rates of Australians throughout the pandemic and the ongoing potential for domestic tourism spending to flow onto retail for the remainder of the year.