Today’s retail trade figures underline just how cautious Australian consumers are being with their spending. Retail trade fell 0.4 per cent on a month-on-month basis and was only 0.8 per cent higher on a year-on-year measure.

Spending on food retailing is the only category that increased on a monthly basis, and the only category showing any consistent rise in spending through the year. This is mostly due to population growth. Australian consumer spending has remained virtually unchanged since late 2022, when consumers really started to feel the effects of rapid increases to the cash rate.

Spending on household goods is particularly weak. Australians spent less in this category this month than they did in October 2021, despite rapid population growth since that time. Household goods spending is heavily impacted by housing completions, and as these are declining due to very low building approvals and commencements, spending in this sector is likely to remain subdued for some time.

In more positive news for borrowers, today’s retail spending figure will be a relief to the Reserve Bank of Australia (RBA) and reduce the threat of sticky inflation, at the very least in the goods category. Spending on services is still driving inflation, however services spending is less impacted by monetary policy.

The RBA can take comfort that their tightening measures are helping drive down inflation. However, this will be of little comfort to businesses in the retail trade, food and beverage and construction sectors, where default and external administrations are on a rising trend.