Retail sales defiant in the face of rate rises, up 0.4% in March

Following February’s 0.2% increase, ABS Retail Trade data released on Wednesday revealed the biggest growth areas were 1.5% rises in spending across cafes, restaurants and takeaway food services, and a 1.0% increase in food retailing.

ABS Head of Retail Statistics Ben Dorber said that while retail sales recorded a third straight rise in March, a pull-back in spending on discretionary goods has seen monthly turnover remain at a similar level to six months ago.

“Food retailing has now recorded 13 consecutive monthly rises, largely driven by high food inflation,” Mr Dorber said.

“Businesses in cafes, restaurants and takeaway food services are passing on their rising costs to consumers through price rises, while also benefitting from strong demand driven by the continued return of large-scale cultural and sporting events.”

“Spending on non-food retailing has slowed in response to interest rate rises and increased cost of living pressures. This follows increased spending during and immediately following much of the COVID-19 pandemic period.”

Major bank economists varied in their expectations, with Westpac anticipating a 0.2% month-on-month increase while ANZ and CommBank closer to the target, forecasting a 0.5% and 0.6% increase respectively.

NAB was the outlier across the major banks, anticipating a bullish 0.5% decline off the back of NAB’s own Online Retail Sales Index. 

NAB Chief Economist Alan Oster said NAB Online Retail Sales Index month-on-month growth contracted 0.2% March, following the strong February result. 

“Online was much stronger than broader retail in February, and while weakening, it would appear that it outperformed broader retail again this month, given our total retail indicator suggests [a decline of] -0.8% month-on-month seasonally adjusted,” Mr Oster said. 

Across the states, the ABS revealed Queensland was the only state or territory to record a rise over 1.0%, with a 1.2% increase in March.

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