- Retail sales rose 0.7%, seasonally adjusted, in August as unseasonably warm August weather boosted consumer spending.
- Total retail turnover reached $36.5 billiion.
- Department stores and clothing industries saw the largest growth in August.
- The warm weather also encouraged more Aussies to dine out, boosting turnover in food-related sectors.
- Online retail sales stalled in August, marking a shift towards in-store shopping.
Total retail sales rose 0.7% on a seasonally adjusted basis to $36.5 billion in August, as the warmer-than-usual weather prompted many Aussies to kickstart their spring shopping.
"This year was the warmest August on record since 1910, which saw more spending on items typically purchased in spring," ABS head of business statistics Robert Ewing said.
"This included summer clothing, liquor, outdoor dining, hardware, gardening items, camping goods, and outdoor equipment."
Today's read follows a flat 0.1% growth in July and 0.5% in June.
The current pace of growth in retail turnover has brought the year-on-year figures to 3.1%.
When compared to Australia's population growth, which expanded by 2.3%, the level of consumer spending is notably strong.
In trend terms, which smooth seasonal effects, retail sales saw a more muted 0.3% month-on-month uplift.
Warm weather drives Aussies to department stores, restaurants
Australian consumers brought their cash to the department stores, which had the largest rise (up 1.6%) in August.
This was followed by clothing, footwear, and personal accessory retailing (up 1.5%) and other retailing (up 1.3%).
As expected, shoppers who dashed to shopping centres in search of Father's Day gifts also lifted the August retail trade figures.
"The lift in turnover from the warmer weather was also boosted by higher discretionary spending as consumers took advantage of Father's Day sales events during the month," Mr Ewing added.
Food-related industries, led by cafes, restaurants, and takeaway food services (up 1%) as well as food retailing (up 0.6%), also drove the uptick.
"More people were out dining at cafes and restaurants enjoying the warm end to the winter months, which also boosted spending on alcohol consumed at home," Mr Ewing said.
Household goods retailing (down 0.3%), which included electronic goods and houseware, was the only industry to fall following heightened spending in recent months due to mid-year sales.
According to the ABS, retail turnover growth was consistent across the country, with rises noted in all states and territories.
"While the eastern mainland states led the rises, most states and territories benefitted from the earlier-than-usual spring temperatures," Mr Ewing said.
Although, some unseasonal rainfall over parts of Western Australia dampened sales slightly."
Victoria and the Northern Territory both posted the largest increases, rising 0.9% in August.
Meanwhile, New South Wales, the ACT, South Australia, and Tasmania all rebounded from negative growth in the previous month to land in positive territory in August.
Consumers shop less online?
More consumers appeared to do their shopping in brick-and-mortar stores last month as online retail sales growth came to a halt.
NAB's Online Retail Sales Index, released on Monday, showed a flat (0%) seasonally adjusted growth in August, following a contraction of 2.5% in July.
Year-on-year, growth marginally accelerated to 9.8%, up from 9.3% in July.
NAB's index measures all online retail spending by consumers using various electronic payment methods, including credit cards, BPAY, and PayPal.
As opposed to ABS' series, NAB's latest index revealed that domestic department store spending fell by 3.6%.
Online takeaway food sales also plunged to 0%, down from 5.6% in July, indicating that Aussies did indeed prefer dining at local cafes and restaurants as the ABS reported.
Other categories saw declines too, with homewares and appliances (down 2.5%) and personal and recreational items (down 2.3%) posting weak online sales.
Growth was also mixed by state, with contractions in VIC and ACT netting growth from all other states. NSW posted a near-flat outcome.
"The headline figure masks results by category and state, where there was general improvement from the July contraction," NAB chief economist Alan Oster said.
"Even within the department stores category, by location, international retailers recorded growth in the month."
While domestic online sales fell 0.2%, international sales rose by 0.4% in August.
Compared to the ABS data, NAB's index covers a broader range of online retailers, including overseas merchants selling to Australian residents.
NAB estimates that Australians spent $58.02 billion on online retail in the 12 months to August, accounting for 13.5% of the total trade estimate of the ABS in July.
NAB moves RBA rate cut forecast to February
Following the previous revision of its rate cut call from November 2023 to May 2024, NAB has once again adjusted its forecast to fall in line with ANZ and Westpac's February start to rate cuts.
"From there we continue to see a steady profile of one cut per quarter, back to 3.10% in early 2026," Mr Oster said.
NAB's economic team cited easing inflation pressures as the reason for the latest revision.
"The risk has been skewed to a first cut earlier in 2025, and today's change acknowledges the balance of risks has likely shifted sufficiently for the RBA to feel comfortable cutting a little sooner than we earlier expected," Mr Oster added.
Housing costs as well as domestic labour and non-labour costs continue to weigh on inflation, whose headline rate currently sits at 2.7%, while trimmed mean is 3.4%.
NAB anticipates these cost pressures to fade "as capacity constraints ease further, and soft demand growth to inhibit passthrough to end consumer prices".
"Household consumption in Australia has held up better than most advanced economy peers, with the notable exception of the United States," Mr Oster said.
"We expect some pick-up in underlying growth and a shift in drivers away from elevated topline population growth towards an improvement in per-capita spend looking forward."
And if Tuesday's retail spending is of any indication, it appears the initial rollout of government tax cuts and energy relief reduced out-of-pocket costs, leaving Aussies with more cash to spare on shopping.
"The worst of the real income squeeze is behind us as inflation has moderated and tax cuts flow through," Mr Oster noted.
"If that supports a more material pickup in activity that slows or stalls progress on disinflation, the RBA will hold for longer.
"Conversely, confirmation of further progress on inflation would give the RBA space to respond more aggressively if the labour market showed signs of deteriorating."
The RBA Board on 24 September decided to leave the cash rate at 4.35% until it meets again in November.
Photo by Ron Lach on Pexels
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