Australian retail sales rose 4.9 per cent year on year in June, a higher-than-anticipated increase, according to data released by the Australian Bureau of Statistics (ABS).
The increase was primarily due to end-of-financial-year (EOFY) sales, more purchases of winter clothing and the release of new products such as the Nintendo Switch 2, said KPMG chief economist Dr Brendan Rynne.
“As cost-of-living pressures continue, households are very much vying for bargains wherever they can, with sale items now consuming a far larger portion of our spending compared to just a few years ago,” Rynne said.
“This month’s results show [that] despite a lift in household savings in the first quarter of the year, families have sought to tighten their belts further to ensure they’re getting the biggest bang for their buck and only buying items they absolutely need, unless it’s a one-off purchase.”
The increased retail spending was comprised mainly of the category of other goods, which includes cosmetics, sports and recreational goods, seeing a 6.9 per cent increase year on year, followed by a 6 per cent increase in the category of clothing, footwear and personal accessories.
Department store spending was up 5.9 per cent year on year, with household goods seeing a 5.6 per cent rise and food retailing, including cafes, restaurants and takeaway sales, rising by 3.3 per cent.
“This is the highest monthly growth we’ve seen across the past year, compared to 2024 spending, which is a promising result during a period of challenging trading conditions,” said Australian Retailers Association (ARA) CEO Chris Rodwell.
“However, it’s important to call out that while retail sales have lifted, this doesn’t necessarily translate to a better operating position for retailers as EOFY discounts are more prominent in June.”
Rodwell said it would be crucial for the RBA to reduce interest rates at this time to create momentum in spending as the end-of-year peak retail sale arrives.
“There’s also a big agenda the Federal Government can action to support Australian retailers as they contend with volatility from trade wars and ultra-low-cost global competitors,” said Rodwell.
“If we want a stronger retail economy, we need a laser focus on cutting red tape and harmonising laws that add unnecessary costs and put upward pressure on prices.
“Some areas ripe for reform include payroll tax, planning, freight and logistics, environmental and waste regulation, and trading hours.”
The ARA urged the Treasurer to enforce policy changes that would help Australia’s $430 billion retail sector invest, grow and create jobs, and to enable smaller businesses to prevent burnout in the wake of the ongoing global challenges.
Moving forward, CreditorWatch’s chief economist Ivan Colhoun said the RBA was on track to cut rates at its August meeting, especially following the modest inflation in retail prices at 2.4 per cent year on year.
“July and beyond are expected to show weaker spending, consistent with past post-discounting lulls, compounded by slowing population growth and ongoing household financial pressure,” said Colhoun.
