Consumer spending continued its strong trajectory in June, with apparel sales up 2.4% and jewellery surging ahead by 23.2% according to Mastercard SpendingPulse.
The data, which measures in-store and online retail sales across all forms of payment, showed that consumer sales across all sectors was up 11.1% compared on the same period last year.
Compared to other retail sectors, apparel saw seen the least growth with fuel and convenience at 23.1%, lodging up 17.9%, home furnishings up 6.5% and electronics up 4.8%.
Australian Retailers Association CEO Paul Zahra said while sales are increasing, it is not a full reflection of sector performance - with rising labour costs, rents, fuel and energy costs and supply chain constraints all adding to the cost crunch for business.
“The performance of the retail sector is not just marked on sale volumes. We are operating in an inflationary landscape, where consumer prices are increasing, which impacts overall retail trade numbers.
“This is creating a perception that the sector is thriving. However, many businesses are severely challenged by rising operating costs associated with labour, fuel, energy, supply chains and rents.
“While consumers are impacted by the rising cost of living, the rising cost of business is in many cases more severe. The economic outlook also has many business owners feeling nervous, as rising interest rates begin to take hold and some natural belt tightening occurs with mortgage holders.
“The household savings rate remains above pre-Covid levels, which will cushion some of the inflationary impacts consumers are experiencing. However, when people rein in spending, discretionary purchases are the first things they cut out.”
Zahra continued: “We remain optimistic the retail sector will be able to weather the current economic headwinds and the rising cost challenges. However, we need to acknowledge that just because overall sales are up, it does not necessarily mean that retailers are doing well.
“As they have through the pandemic, many retailers continue to reduce inflationary shocks for their customers by absorbing some costs, which of course affects their margins. And passing on cost increases has impacted their volumes.”