Deloitte Australia has released its most recent figures into retail spending in Australia.
According to the firm's quarterly survey, retail spending improved in 2017-18, with retail sales growing 2.6% – due to a 1.3% increase in June – which is an improvement on the 1.9% gain in 2016-17.
The survey also predicts that real retail sales growth for the current financial year is expected to remain around 2.6%, with most of the spending growth occurring in the food sector, which represents the first time the sector could outpace non-food spending since 2012-13.
Deloitte also forecasts that retail price growth is expected to rise in 2018-19 as retailers face some cost increases.
However, during the period Deloitte found that household budgets remained under pressure due to stagnant wage growth and non-discretionary price rises. Consumers had to dip into their savings to support spending activity, hence the increase.
Deloitte Access Economics partner and Retail Forecasts principal author, David Rumbens, said that consumers spent most at the end of the financial year.
“The household savings ratio fell to a decade-low 1.0% in June 2018, a dramatic fall from the 4.7% savings ratio in March 2017. With income growth stagnating and some non-discretionary prices rising strongly, many households turned to their savings to support spending.
“This decline, ongoing since 2015, has actually helped retailers. Consumers opened their wallets at the end of the financial year, with June quarter sales surprising on the upside.
“Nominal retail turnover increased 1.2% over the quarter, the strongest rise during the financial year. However, this is not sustainable support and savings-driven sales growth can’t last forever.
“The growth trend is unlikely to continue in the second half of 2018, as household budgets continue to come under pressure from tepid wage growth, falling house prices, and rising non-discretionary costs.”
“Intense competition and rising operating costs will weigh on many retailers, but those focused on the value they offer to the consumer are likely to do well in terms of both sales and profitability.”
The report was released on September 12.