Marking the fifth consecutive monthly rise in retail turnover, inflation continues to fuel a growth in retail spending with annual pace lifting from 9.6% to 10.4% in May.

Ben Dorber, ABS Director of Quarterly Economy Wide Statistics, flagged inflation as being a key driver to the growth across five of the six retail industries in May. 

“Higher prices added to the growth in retail turnover in May," Mr Dorber said. 

"This was most evident in cafes, restaurants and takeaway food services and food retailing.”

The bureau revealed of the states and territories, New South Wales had the largest rise in retail turnover, up 1.6%, followed by Victoria, up 1.3%.

Turnover also rose in South Australia, Western Australia, Tasmania, and the Northern Territory, while Queensland and the Australian Capital Territory recorded falls. 

The ABS noted the fall in Queensland follows increased turnover from the flood recovery in March and a boost from tourism in April.

Is retail spending softening?

NAB Chief Economist Alan Oster said in the broader measure of retail trade, the NAB Cashless Retail Index suggests spending growth is beginning to soften.

"On a month-to-month, seasonally adjusted basis growth for the NAB Online Retail Sales Index contracted 0.9% in May, following on from a 1.3% contraction in April," Mr Oster said. 

"It is likely that inflationary pressures and concerns over the future direction of borrowing costs are beginning to weigh on the consumer."

Recent data from NAB across a survey of 2,000 Aussies revealed changes are being made to spending behaviours with 44% of Australians cutting back on 'micro-treats' such as coffees, snacks, and lunch.

Inflation front of mind despite significant savings buffers

New research from data platform Dynata, revealed 92% of Australians are at least fairly concerned about the continued impacts of rising inflation upon their back pockets.

In a survey of 1,000 Australians, Dynata found Gen-X and Millennials are the most concerned about inflation out of every age bracket, with over 70% “very” or “extremely” concerned.

Importantly, Millennials have not lived through a sustained period of high inflation, unlike older generations, prompting a greater appetite for concern. 

Further, Dynata revealed 34% of Australians are buying less food, 49% of Australians are buying fewer non-essential items and 50% of Australians are buying cheaper products.

The biggest savers were found to be Gen-Z, of which 82% save money on a regular basis, with 59% of Gen-Z and 53% of Millennials saving more now than they did a year ago. 

ANZ Senior Economist Adelaide Timbrell said the large savings buffer households built up through COVID is continuing to delay and reduce the negative impacts of high inflation and rising interest rates.

"We think household consumption growth will outpace GDP in the coming months despite a likely slowdown in both," Ms Timbrell said. 

In a speech last week, Reserve Bank Governor Dr Philip Lowe revealed inflation will not return to the RBA's target band of 2-3% for a number of years.

"Household balance sheets are generally in good shape, having accumulated more than $200 billion in additional savings during the pandemic," Dr Lowe said. 

"Furthermore, the current rate of saving out of income remains materially higher than it was before the pandemic, so there is a degree of flexibility in many household budgets."


Advertisement

Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.

Provider

4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance

High Interest Savings Account (< $250k)

  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

Savings Maximiser (<$100k)

    010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • Earn up to 5.40% pa by depositing $1,000 in the previous month
    • No account fees
    • Easy access to your money

    Saver Account (<$250k)

    • Earn up to 5.40% pa by depositing $1,000 in the previous month
    • No account fees
    • Easy access to your money
    4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking

    Savings Account (Amounts < $250k)

    • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
    05001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • Maximum Age - 24

    Goal Saver

    • Maximum Age - 24
    02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    No monthly fees
    • Download the App to open your account
    • Get better visibility of your spending within App!
    • Deposit $200 per month to activate bonus interest
    No monthly fees

    Save Account

    • Download the App to open your account
    • Get better visibility of your spending within App!
    • Deposit $200 per month to activate bonus interest
    0200$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    • No fees or penalties for withdrawing money
    • Savings guaranteed up to $250,000
    • Maximise your savings and reach your goals faster with Auto-Savings

    Bonus Saver Account (Amounts < $250k)

    • No fees or penalties for withdrawing money
    • Savings guaranteed up to $250,000
    • Maximise your savings and reach your goals faster with Auto-Savings
    010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
    For customers aged 14-35 years
    For customers aged 14-35 years

    Future Saver Account ( < $50k)

      010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

      Boost Saver

        Important Information and Comparison Rate Warning

        All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of March 19, 2024. View disclaimer.

        Image by Shelley Pauls via Unsplash