Australian consumers continue to watch every dollar

- May 31, 2024 2 MIN READ
Cost of living crisis means Australians aren't spending

No wonder companies like JB Hi-Fi, Baby Bunting and Super Retail Group are warning investors of a slowdown in sales. April retail trade figures were really weak – up just 0.1 per cent for the month, or half what economists were expecting.

It follows a fall of 0.4 per cent in March, so there are absolutely no signs of a bounce back with shoppers opening their purses.

July tax cuts to be saved, not spent

We have the 1 July tax cuts and the federal and some state government energy subsidies coming through in the next couple of weeks. However, all the consumer surveys are showing that money will be saved rather than spent. It will be used to pay down debt or build savings for emergencies.

By sales category food retailing (‑0.5 per cent) and clothing & footwear (‑0.7 per cent) fell in April. Department stores (0.1 per cent) and cafes, restaurants & takeaway (0.3 per cent) recorded modest lifts while other retailing (which includes other recreation goods, pharmaceuticals & cosmetics, newspapers & books) recorded a 1.6 per cent lift in April.

Over the past year other retailing has outperformed, rising by 4.7 per cent while food retailing and cafes, restaurants & takeaway have both risen by 2 per cent, which is well below the inflation rate. While costs are going up, real sales are falling.

That’s why you’re seeing lots of media stories about shops, cafes, restaurants and pubs all closing down.

Households trading down

Even spending on essentials like food is slower than the pace of population growth. This is backed up by commentary from retailers suggesting households are trading down brands and food options. All other categories have recorded falls: department stores (‑1.3 per cent), clothing (‑2.5 per cent) and household goods (‑1.3 per cent).

On a state-by-state basis, NSW (0.7 per cent) and SA (0.5 per cent) recorded gains while Vic (‑0.4 per cent) and Qld (‑0.2 per cent) fell. WA and Tas recorded no growth in the month. Over the past year the large states of NSW and Vic have underperformed compared to the other states.

Retail sales growth lowest in 40 years

Look at this, annual retail sales growth is currently at the lowest rate in 40 years. Yep, 40 years.

Consumer spending down

I reckon this CommBank iQ chart really sums up where the big cuts are coming from. And that’s families going through that high expense period of raising children and buying a house.

Total change in spending per capita by age

The over 60-year-olds are the only consumers increasing their spending by more than the inflation rate. The 25–35-year-olds are cutting spending outright, while other age groups have increased their spending by less that inflation.

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