Cost of living pressures show the first sign of impacting spending at the checkout, with retail sales falling 0.2% in October.
Data published by the ABS for October revealed the first decline in retail sales since December 2021, with department stores copping the brunt of the decline at 2.4%.
Key Points
- Retail sales decline 0.2% in October - marking the first fall in 2022.
- Department store spending headlined the decline, falling 2.4%.
- Major bank economists did not anticipate the fall, expecting retail sales to fall flat or increase again in October.
The decline for the second consecutive month in department store spending was felt the most across clothing, footwear and personal accessory retailing.
Cafes, restaurants and takeaway food service spending fell for the first time since January, down 0.4%.
ABS Head of Retail Statistics Ben Dorber noted the October fall in retail turnover ends a run of nine straight monthly rises.
“(This) suggests increased cost of living pressures including interest rate rises have started to weigh on consumer spending,” Mr Dorber said.
“Turnover fell in all industries in October except for food retailing, which rose 0.4% boosted by flood-related spending in parts of Australia and continued high food prices.”
Across the nation, the Northern Territory had the largest fall - declining 1.8%, followed by Tasmania at 1.7% and the Australian Capital Territory at 1.4%.
Major bank economists were at odds over expected retail sales figures for October, yet all were off the mark with penciled-in forecasts.
CommBank economists were closest to the mark, expecting retail sales to remain flat on September results off the back of internal card spending data indicating a weak outcome.
ABS retail spending data for November and December will factor in the start of the pre-Christmas sales rush including Black Friday, with near $64 billion forecast by the Australian Retailers Association to be spent in the lead up to Christmas.
CommBank Senior Economist Kristina Clifton echoed this, noting monthly retail trade prints will get interesting over the next few months
thanks to the November Black Friday-Cyber Monday sales activity.
"With this sale period growing in popularity over the years, as well as disruptions to spending in recent years because of pandemic lockdowns and restrictions, the seasonal factors may be more difficult than usual for the ABS to calculate," Ms Clifton said.
"It may take until the data for early next year is released before we get a true picture of the spending pulse from the ABS retail trade data over this period."
"Retail sales decline 0.2%, falling for the first time in 2022" was originally published on Savings.com.au and was republished with permission.