Australian retail sales surged 3.3 per cent year-over-year in May, according to Australian Bureau of Statistics (ABS) data, reaching $37.3 billion. 

Cosmetics, sports and recreational goods saw the largest increase, up 4.78 per cent, followed by cafes, restaurants and takeaways, which rose 3.83 per cent year-on-year. 

According to the ABS, department store spending increased by 3.7 per cent, while spending on clothing, footwear, and accessories rose by 3.5 per cent. 

Household goods and food spending saw the lowest increases in spending at 2.81 per cent and 2.58 per cent, respectively. 

With the cost-of-living pressures still plaguing Australians, consumers have turned to online retailers to hunt for bargains, with online non-food-related retail sales surging nearly 11 per cent this year.

“Tighter household budgets, aggressive marketing by online businesses and changing consumer habits, particularly among younger people more familiar with online shopping, have contributed to this growth,” said KPMG senior economist Terry Rawnsley in a statement. 

“While inflation has metered back, with the CPI figure for May coming in at 2.1 per cent, consumer confidence remains soft,” said Australian Retailers Association (ARA) CEO Chris Rodwell. 

Rodwell said the RBA’s upcoming decision on interest rates was pivotal and that the ARA had urged the RBA to cut interest rates so that consumer confidence could improve in the second half of the year.
 
“We also know that sales results are only part of the story with retailers continuing to battle higher business costs across leasing, wages, energy, insurance and the supply chain,” said Rodwell.

“As a sector which employs one in 10 Australians, we want to shift gears to see retailers move out of survival mode into truly thriving and helping power our economy.”