Retail spending growth slowed heading into the peak trading season, as clothing, footwear and personal accessory retailers held pace with the broader sector.
The latest Australian Bureau of Statistics (ABS) Household Spending Indicator data shows retail spending rose 4.9 per cent over the year to September, to $39.91 billion. That was down from 5.6 per cent annual growth in August.
Clothing, footwear and personal accessory retailing grew 4.9 per cent year-on-year to $3.06 billion, in line with the overall sector. That was down slightly from 5.2 per cent annual growth in August. Monthly spending in the category rose 0.3 per cent.
Department stores and large online retailers continued to trail the sector, with spending up just 1.7 per cent to $1.64 billion. Other retailing, which includes pharmaceutical and cosmetic retailing, recorded the strongest growth at 8.1 per cent to $7.18 billion. Cafes, restaurants and takeaway food services followed, up 7.4 per cent to $5.98 billion.
Household goods retailing rose 4.1 per cent to $6.55 billion, while food retailing grew 3.3 per cent to $15.50 billion, nearly all of which was accounted for by a 3.2 per cent rise in food and non-alcoholic beverage prices.
By state, ABS data shows clothing, footwear and accessories spending grew fastest in the Northern Territory (up 10.2 per cent), Western Australia (up 8.5 per cent), Tasmania (up 8.4 per cent) and South Australia (up 7.5 per cent).
Growth was more subdued in the largest markets. Queensland rose 5.1 per cent, down from 7.3 per cent in August, Victoria rose 4.7 per cent, and the ACT rose 4.4 per cent. New South Wales, the category’s biggest market at $1.12 billion, recorded the weakest growth at 3.6 per cent.
ARC chief economist Glenn Fahey said the slowdown was concerning, with deteriorating consumer confidence beginning to weigh on retail activity.
“Consumer sentiment fell sharply in September and deteriorated further in October, suggesting the pressure on household spending is unlikely to ease in the months ahead,” Fahey said.
He noted that the Reserve Bank had downgraded its forecasts for household consumption growth to 1.4 per cent over the year to both December 2026 and June 2027, down from 1.6 per cent. Fahey said the weaker outlook, combined with this week’s interest rate increase, came at a difficult time for retailers, with Black Friday and the Christmas trading period fast approaching.
“Retailers are working hard to keep prices affordable,” Fahey said.
“Clothing and footwear prices have risen just 0.4 per cent over the past year, while prices for furnishings, household equipment and services have increased just 0.8 per cent, compared with headline inflation of 4.3 per cent.”
Across the broader economy, ABS figures show total household spending rose 0.6 per cent in September in seasonally adjusted terms, and 6.8 per cent year-on-year. Separate ABS household spending figures, which track what consumers bought rather than where they shopped, show spending on clothing and footwear rose 0.1 per cent in September, following a 1.1 per cent fall in August.
“Household spending volumes continued to grow in the September quarter, marking the fourth quarter in a row of growth,” ABS head of business statistics Tom Lay said.