Retail trade increased in seasonally adjusted terms by 1.1 per cent in January, but was flat in trend terms. Given that retail trade jumps around quite dramatically between November, December and January, the trend data is important to consider and, as the ABS suggests, indicates there is no underlying growth in retail trade by Australian consumers.

In good news for café and restaurant owners, there was a bounce back in spend in this category, with turnover increasing by 1.3 per cent month-on-month. However, in total turnover terms, Australians still spent less at cafes and restaurants than they did in September 2023. Similarly, overall retail turnover is only 0.2 per cent higher than it was in September on a seasonally adjusted basis. Australian consumers are clearly watching their spend and making adjustments due to high housing costs for the roughly 60% of Australians who rent or have a home loan.

CreditorWatch’s Business Risk Index (BRI) data for January 2024 supports these retail trade trends, with the average value of invoices of our B2B clients on a sustained fall since September 2023. Businesses are clearly feeling the impact of reduced consumer spending, even if they are not direct retail traders. It is unlikely we will see a decent recovery in turnover until we get closer to a drop in the cash rate. This is not likely to happen before Q3 2024.