Modest August retail spending strengthens case for November rate cut

Spending in retail-related categories grew by a modest 3.7% in August compared to the same period in 2024, registering $37.8 billion in sales, according to data from the Australian Bureau of Statistics (ABS). This moderation in recent performance underlines the need for the RBA to stay vigilant in considering a further rate cut this side of Christmas, peak retail bodies Australian Retailers Association (ARA) and National Retail Association (NRA) said today.

The states of Western Australia (up 5.6%), Queensland (up 4.6%) and Tasmania (up 4.6%) reflected stronger growth, while the Northern Territory (up 4.4%) and South Australia (up 4.0%) recorded reasonable performance. However, Victoria (up 3.3%), New South Wales (up 2.3%) and the ACT (up 1.6%) all registered subdued performance.

Cafes, restaurants and takeaway experienced the most significant category increase (up 7.0%), followed by ‘Other’ retailing (up 5.6%), household goods retailing (up by 3.7%), department stores and large online retailers (up 3.5%). Spending marginally increased in food retailing (up 1.9%) and in clothing, footwear and accessories (up 1.8%).

“Overall, this result reflects retailers continue to face very mixed conditions. It also reveals a reliance on major spending events to stimulate sales,” said ARA CEO Chris Rodwell. “Whilst trading remains above overall 2024 levels, unfortunately August growth dropped back compared to July (up 4.6% yoy) and June (up 4.9% yoy).

“Retailers want improved sales momentum as we enter the all-important peak season, where many discretionary retailers make up to two-thirds of their annual profits. However, these results reflect many Australians still face significant budgetary constraints and that consumer confidence remains subdued.

“That’s why we are calling for the RBA to remain vigilant to a pre-Christmas rate-cut to relieve some pressure on households during this important season.

“Running a retail business remains challenging, with rising operational and supply chain costs. Compounding this, the ongoing surge in retail crime across the country imposes additional financial and operational pressures that many retailers simply can’t sustain.

“We continue to advocate for cutting unnecessary regulation and red tape at both federal and state levels, to help ease cost pressures and put downward pressure on prices for consumers. We need to see a more consistent approach to payroll tax, planning, freight and logistics, environmental and waste regulation, and trading hours. Equally, we’re pushing for a coordinated national strategy to address retail crime, which currently costs the sector an estimated $9 billion annually plus untold emotional distress,” he said.