Do consumers tighten their purse strings when inflation is high?

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on May 27, 2022 Fact Checked
Do consumers tighten their purse strings when inflation is high?

Australian retail turnover rose 0.9% or $33.9 million in April to another record-high, marking the fourth consecutive monthly rise according to the ABS.

This is following a 1.6% rise in March, a 1.8% rise in February, and a 1.6% rise in January.

Sales this Easter holiday period were driven by spending across the food industries according to ABS Director of Quarterly Economy Wide Statistics Ben James.

"High food prices have combined with increased household spending over the April holiday period as more people are travelling, dining out and holding family gatherings," Mr James said.

"There were strong rises in both food retailing and cafes, restaurants and takeaway food services.

"This is a contrast to the consumer behaviour previously seen during the pandemic, where these two industries would consistently move in opposite directions as outbreaks and restrictions either tightened or eased."

Food retailing showed the largest increase of 1.9%, followed by cafes, restaurants and takeaway food services (up 3.3%), and clothing, footwear and personal accessory retailing (up 3.1%).

Household goods retailing fell by 2.7%, while department stores fell by 2.5%.

When compared to April 2021, retail sales rose 9.6%.

NSW only state to see retail sales fall

NSW was the only state or territory to see retail sales fall in April, down 0.3% following the strong result in March.

Queensland experienced the largest rise in retail turnover overall at 1.6%, boosted by further eased restrictions and the removal of density limits, check-in and vaccination requirements to enter venues.

Retail sales also increased in Victoria (1.1%), Western Australia (2.2%), South Australia (1.4%), Tasmania (2%), the ACT (0.5%) and the Northern Territory (0.7%).

Image by Jay Wennington on Unsplash

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Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.


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