Today’s retail trade figures confirm that Australian consumers pulled forward much of their Christmas spending to November’s Black Friday sales. Very tight household budgets and low levels of available discretionary spending means consumers were searching for savings when buying their Christmas presents and other household goods. Overall retail trade fell 2.7 per cent on a seasonally adjusted monthly basis, more than offsetting the revised 1.6 per cent increase recorded over the month of November.
Not surprisingly, the biggest falls in expenditure were recorded in the discretionary spend categories, with household goods, department store and clothing, footwear and personal accessory retailing falling by 8.5, 8.1 and 5.7 per cent respectively over the month.
Of further concern is the continuing fall in expenditure at cafes, restaurants and takeaway food services. Expenditure in this area is up only 1.6 per cent year on year, despite very strong population and pricing growth. Over the year to November 2023, prices for food & non-alcoholic beverages, alcohol, electricity & gas have risen by 4.6, 4.2, 10.7 and 12.9 per cent respectively. Given these are all large cost inputs for cafes and restaurants, a 1.6 per cent increase in turnover overall means that overall profits in this sector are likely well down for many operators. The food and beverage sector, unfortunately, is likely to experience higher rates of business failures over 2024. The business failure rate in this sector is already the highest across all sectors, at 6.7 per cent as at November 2023.
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