After a subdued December (largely an after-effect of a spike in spending the prior month) shoppers returned in droves in January, spending a total of $35.7 billion on a seasonally adjusted basis.
- Retail turnover lifted 1.1% for the month of January
- It was largely driven by an increase in spending on non-food items
- Meanwhile, major sporting events saw more Aussies splashing out on eating out and takeaway foods
However, on trend terms, retail trade was flat month-on-month.
The latest spending data comes on the back of good news for cash-strapped borrowers.
Annual inflation came in at a two-year low of 3.4% for a consecutive month in January, according to Australian Bureau of Statistics (ABS) figures released yesterday.
As CommBank noted in its latest Household Spending Index (HSI), November’s Reserve Bank of Australia (RBA) cash rate hike was yet to be felt by most borrowers last month.
Those holding variable mortgage products were likely hit with higher interest rates at some point in February, the bank pointed out.
Growth in retail trade last month was driven by an uptick in spending on non-food items.
Clothing, footwear, and personal accessories saw the largest increase in spend (+2.4%), followed by household goods (+2.3%), and department stores (+1.7%).
“Retail turnover was unchanged in trend terms in January," ABS head of retail statistics Ben Dorber said.
This means there has been no growth in retail turnover when we look through the volatility of the past few months.
“Rather, spending patterns have shifted because of changes in seasonality around Black Friday as consumers took advantage of discounting in response to cost of living pressures.”
Simultaneously, sporting events saw Aussies splash out at cafes, restaurants, and on takeaway food, with the category's turnover rising 1.3% after four consecutive monthly falls.
"Bumper crowds for the Australian tennis summer and the Big Bash League boosted sales in catering services, which are part of this industry,” Mr Dorber said.
The increase in retail turnover likely came as no surprise to eagle-eyed data fiends.
CommBank’s HSI for the month of January revealed a 3.1% month-on-month uptick, recovering much of the revised 3.5% fall it recorded in December.
Meanwhile, NAB’s Online Retail Sales Index found online spending rose 27.8% over the year to January – a figure not seen since the depths of the pandemic era.
Though, the bank noted that was largely due to lesser online retail spending in 2023.
Today’s read came in slightly lower than forecasts posted by economists at the majority of the big four banks.
CommBank predicted retail trade would come in at 1.3%, while ANZ and NAB had forecasted jumps of 1.5% and 1.8% respectively.
Westpac was the outlier, tipping retail spending to rise just 0.3% in January.
Will rising retail trade push the RBA to hike rates?
Today’s retail spending read will likely have little effect on the central bank’s decision making.
As CommBank economist Stephen Wu pointed out, the figure has been notably volatile and subject to revision in recent months.
Meanwhile, inflation is tracking in the right direction.
The RBA aims to keep inflation in the band of 2% to 3% on an annual basis.
With the cash-eating measure seemingly on the way down, today’s release assumably won’t keep RBA board members up at night.
"Consumers release purse strings in January as inflation dwindles" was originally published on Savings.com.au and was republished with permission.