This 3.9% decline in retail sales to $34.472 billion comes off the back of ABS inflation data for the December quarter, revealing a 1.9% increase from September and a 7.8% increase annually.
Despite the Christmas holiday period, Aussies reined-in spending with the ABS detailing turnover fell across industries previously boosted by Black Friday shopping sprees.
ABS Head of Retail Statistics Ben Dorber said the large fall in December suggests that retail spending is slowing due to high cost-of living pressures.
“Retail businesses reported that many consumers had responded to these pressures by doing more Christmas shopping in November to take advantage of heavy promotional activity and discounting as part of the Black Friday sales event,” Mr Dorber said.
“Seasonal spending patterns continue to change and evolve around Black Friday and the holiday period.”
Major bank economists had anticipated a decline in retail sales, yet not to the extent outlined by the ABS data.
ANZ and Westpac economists had pencilled-in a 0.2% and 0.3% decline for December retail sales respectively, while CommBank economists anticipated a larger 1.2% decline backed by changing seasonal patterns driven by the emergence of Black Friday sales.
IFM Chief Economist Alex Joiner detailed outside of the heights of the COVID-19 pandemic and the introduction of GST, the December result mark the worst decline in the history of the series.
A massive pull back in retail sales, outside the pandemic and GST introduction the worst decline in the history of the series. Most than offsetting the November spike and will likely mean retail sales will subtract from Q4 GDP, the party is over... pic.twitter.com/wwOE1Tdl6m— Alex Joiner (@IFM_Economist) January 31, 2023
Westpac Senior Economist Matthew Hassan noted the December fall reverses the gains made in November.
"Taking the two months together suggests there has been an underlying trend decline in response to rising interest rates that may have bitten harder late in the year," Mr Hassan said.
Across the industries, the ABS revealed department stores suffered the largest hit in volume of sales, down 14.3%, followed by clothing, footwear and accessories, down 13.1%.
Food retailing was the only industry in December to buck the trend, with the ABS noting sales volumes lifted 0.3%.
The declining trend in retail sales was seen across each state and territory throughout December, with the lowest decline in the Northern Territory at 2.4% and the largest decline in both Victoria and Western Australia at 4.7%.
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