Retailers’ traditional end-of-year promotional blitz is in full swing, but there are signs that Australian shoppers are becoming more cautious.
While consumers have been resilient in the face of rate hikes and high inflation, bank spending trackers have noted some pre-Christmas dovishness.
Spending monitored by ANZ for the month ended December 18 was just 10 percent higher than 2019, despite price inflation over the period being 10.5 percent and the national population increasing by nearly 2 percent.
That points to “lackluster spending” in the run-up to Christmas, says ANZ economist Adelaide Timbrell.
In 2022, households are grappling with the highest inflation in three decades and eight straight months of interest rate hikes. The Reserve Bank official interest rate is at a 10-year high of 3.1 percent. Consumers are also expecting sharp increases in electricity prices in the coming months.
For much of the year, spending proved surprisingly resilient in the face of these headwinds. But it was only a matter of time before pressure on the cost of living and higher borrowing costs took their toll. The weak credit growth numbers released just before Christmas were another sign of caution in the economy.
December could be a turning point for consumers. “The spending slowdown has started,” Timbrell warns.
The last three months of the calendar year, which includes Christmas and the Boxing Day sales, are crucial for the retail sector which is one of Australia’s largest employers. According to the Australia Retailers Association, “most discretionary retailers are making up to two-thirds of their profits during this critical trading period”.
https://www.smh.com.au/business/the-economy/lacklustre-spending-how-black-friday-put-a-damper-on-boxing-day-sales-20221226-p5c8tm.html?ref=rss&utm_medium=rss&utm_source=rss_business Boxing Day sales slowed by Black Friday