Retail sales in January have lifted by 0.3 per cent month-on-month, with year-on-year growth up 3.8 per cent.
This is according to new data from the Australian Bureau of Statistics (ABS), which noted that the month-on-month lift followed a 0.1 per cent fall in December and a 0.7 per cent rise in November last year.
“While the pick-up in retail spending since mid-2024 has been boosted by more discretionary spending, this month’s rise is mostly driven by food-related spending,” ABS head of business statistics Robert Ewing said.
Spending across clothing, footwear and personal accessories was up by 2 per cent, wth other retailing leading the charge a 2.4 per cent. Other retailing includes cosmetics, sports and recreational goods.
Food-related spending bounced back in January following falls last month with rises in both cafes, restaurants and takeaway food services (up 1.1 per cent) and food retailing (up 0.7 per cent).
“Bumper crowds across large-scale events, including record attendance at the Australian Tennis Open and cricket events, lifted spending in catering services,” Ewing said.
“Food retailing also rebounded in January, particularly in Victoria where supply chain disruptions negatively impacted December supermarket spending.”
Household goods largely offset the rise across non-food goods, with monthly sales dropping by 4.4 per cent.
“The fall in household goods follows four straight rises driven by widespread discounting activity around Black Friday and Cyber Monday sales events,” Ewing said.
“Consumers bought furniture and electrical goods in earlier months to take advantage of the large discounts on offer.”
Total sales across retail hit $37.08 billion, with the Australian Retailers Association chief industry affairs officer Fleur Brown calling the overall lift a positive contrast to 2024.
“We are continuing to see a mixed performance across retail categories,” Brown said. “Whilst some categories such as clothing and recreation were bolstered by back to school and holiday spending, January is traditionally a quieter month following the festive season and Boxing Day sales.
“Looking ahead, whilst these results are heartening, retail is far from out of the woods. Cost-of-living pressures remain acute and it is likely to remain a challenging year for retail.”
Brown added that the Reserve Bank of Australia’s April decision will be crucial in shaping consumer confidence and trading conditions.
“Whilst interest rate decisions tend to have a lag effect on consumer spending, we are cautiously optimistic we will see some improved trading conditions ahead.”
National Retail Association Interim CEO Lindsay Carroll added that the data is a promising result for consumer sentiment, but business conditions remain tough.
Carroll said high rates of crime, the increased cost of doing business, the demand to stay competitive, and the lack of sufficient support from governments have created a counterproductive environment for retailers.
“Ahead of the federal election, we are calling on all sides of government to come in on a unity ticket to bolster Australian businesses,” Carroll said.
“We urge governments to promote policies that encourage digital transformation in small to medium businesses. AI advancements and technology would help vulnerable businesses combat the growing tide of retail crime.
“Not all businesses have the time or resources to navigate complex regulatory environments. Governments need to cut red tape around compliance measures, especially for small business owners, so they can work on the business and not in the business.
“We are watching business insolvencies continue to rise despite the rate cut delivered by the Reserve Bank in February. Retailers need all sides of government prioritise these issues, so Australia’s second largest employer doesn’t fall through the cracks.”