Australian retail sales are looking strong
Australian retail sales reached a record high in the last three months of 2021. This was due to relaxed virus restrictions and end-of-year holiday shopping, which underpins a robust economic recovery.
The fourth quarter sales data from the Australian Bureau of Statistics (ABS) showed an 8.2 per cent increase in sales. This was after a sharp decline in the previous period when two of the most populous states in the country were under lockdown. Economists expected a 7.8 per cent rise, but the gain was more significant.
This will increase policymakers’ confidence in the economy, which is forecast to recover from the third quarter of a pandemic-induced contraction. Economists predict that the Australian Reserve Bank will raise interest rates in this year’s second half due to boosted household spending.
Trade data last week also showed an import surge in the previous three months of 2021.
This was likely due to high household demand. GDP is expected to suffer as a result of higher import volume. Among others, the following statistics were reported by the ABS:
- Restaurants, cafes and take-out food services increased by 18.8 per cent.
- The only industry to see a decline was food retailing, which fell by 1.6 per cent.
- The series’ highest quarterly sales volume is taking place in the present.
- The gains were led by clothing, footwear, and personal accessories, which soared by 43.1 per cent.
Retail sales in NSW & Victoria rose by 15.3 per cent and 10.2 per cent, respectively, due to the release of consumer demand from states under prolonged lockdown.
Why is retail trade such an important component of the Australian economy?
Retail sales are one of the most critical components of the Australian economy. It accounts for a significant proportion of GDP and employment. The sector is also an important driver of consumer spending, which is a crucial driver of economic growth.
The retail sector in Australia has been growing in recent years, driven by solid growth in online sales. Online retail sales now account for around 10 per cent of total retail sales, up from about 5 per cent a few years ago. This growth has been driven by several factors, including the increasing use of smartphones and tablets, the expansion of broadband connectivity, and the growing number of Australians shopping online.
The growth in online retail has had a significant impact on the way that Australians shop. In particular, it has changed how Australians buy groceries and other essential items.
Online grocery sales are now worth around $5 billion per year, and this is expected to grow to $10 billion this year. This growth is being driven by the increasing number of Australians who are buying groceries online, as well as the expanding range of products that are available for purchase online.
What are the implications of the strong retail sales data?
The strong retail sales data suggests that consumer spending remains robust despite rising interest rates and inflationary pressures. This is positive news for the economy as it suggests that households are still willing to spend despite these headwinds.
However, it is worth noting that much of the recent growth in retail sales has been driven by strong growth in online sales. This means that traditional brick-and-mortar retailers may be struggling to keep up with their online rivals. This could have implications for employment in the retail sector as well as for economic growth more broadly.
The latest retail sales and inflation forecasts
Australian retail sales rose in June 2022 but fell short of market forecasts. This signifies that rising inflation and higher interest rates could finally limit consumer demand. The ABS data shows that retail sales increased 0.2 per cent in June to a record $34.3 billion ($23.99 billion). This was less than analysts expected and is the lowest gain for the year.
Although sales were up 12 per cent compared to a year ago, much was due to rising volumes and prices. Recently released figures show that consumer price inflation was up at 6.1 per cent in the second quarter, to the highest level in more than 20 years. This was primarily due to food, construction, and energy costs.
Many top-tier Australian retail trading giants have performed exceptionally well in recent months. Bunnings, a retail giant, won the top spot in Power Retail’s annual online retail awards. Showpo, a smaller retailer, took home two major category awards and many other well-known and rising retail companies.
These are the ABS report’s key metrics:
The June 2022 seasonally adjusted estimation includes the following:
- Retail trade is up 0.2 per cent month on month.
- Retail trade is up 12 per cent in comparison to June 2021 and is currently at $34.239 billion.
- Retail trade in volume terms reveals that the adjusted seasonally estimate was up 1.4 per cent during the June quarter of the current year*.