Retail spending plunges in December as shoppers shunned Boxing Day sales

Retail spending plunges in December as shoppers shunned Boxing Day sales
  • PublishedJanuary 30, 2024

Cost conscious shoppers shunned Christmas and Boxing Day sales in December in a further sign that the economy is cooling under the impact of elevated interest rates.

Retail spending plunged 2.7 per cent in December, the Australian Bureau of Statistics said on Tuesday, falling further than economists’ forecasts for a 2 per cent decline.

But the larger-than-expected loss came after turnover surged by downwardly revised 1.6 per cent in November, as shoppers brought forward spending to deliver a one-off splurge at the Black Friday – Cyber Monday sales.

According to the seasonally adjusted figures, spending in December fell to $35.2bn, down from $36.1bn the month prior as consumers altered their spending habits.

“This shift in spending from December to November reflects the growing popularity of Black Friday sales and the impact of cost-of-living pressures, with consumers seeking out bargains and taking advantage of discounts in November,” the Bureau’s head of retail statistics Ben Dorber said.

Shoppers brought forward their spending to November, instead of the traditionally strong month of December, to take advantage of the Black Friday sales. Photo by: NCA Newswire/ Gaye Gerard

Shoppers brought forward their spending to November, instead of the traditionally strong month of December, to take advantage of the Black Friday sales. Photo by: NCA Newswire/ Gaye Gerard

A fall in discretionary spending was the primary driver for the weaker monthly result — turnover fell across much of the sector with household goods spending sliding 8.5 per cent, spending at department stores down 8.1 per cent, and clothing and footwear easing 5.1 per cent.

Food retailing was the one bright spot across the sector, with turnover edging 0.1 per cent higher.

Compared with the spending spree many retailers experienced in November, a quieter Christmas period was expected.

Rip Curl and Kathmandu parent KMD Brands warned of a significant slowdown in sales heading into the Christmas sales period, with forward orders from its wholesale customers taking a substantial hit.

Harvey Norman similarly anticipated a weaker Christmas sales period following the stronger Black Friday result.

However, it wasn’t bad news for all retailers.

Super Retail Group, the owner of brands including Macpac, BCF and Supercheap Auto, capped off the first half of the 2024 financial year with a bumper sales period that pushed the company’s revenue past $2bn.

The group “traded well” over the Christmas holiday period, it said in a trading update released earlier this month.

Retail spending points to soft landing

On Wednesday, fresh inflation figures are expected to show prices growth moderated to 4.2 per cent in the December quarter, easing from 5.4 per cent in the three months to September.

Cooling spending growth and moderating price pressures are consistent with the Australian economy achieving a soft landing, that is where inflation is tamed without triggering a recession.

The fresh spending data keeps the Reserve Bank on track to hold rates steady at its next interest rate decision, scheduled for February 6, and contemplate cuts later in the year.

Bond markets are pricing two rate cuts before year’s end, bringing interest rates to 3.85 per cent.

SOURCE: NEWS.COM

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