New ABS data reveals $37.7 billion retail spending milestone, yet discretionary retailers face uncertain peak season prospects.
What’s happening: Australian retail spending surged 4.6% in July to $37.7 billion compared to the same period last year, according to new ABS Monthly Household Spending Indicator data that has replaced the bureau’s traditional retail trade statistics after 75 years.
Why this matters: The strong start to the fiscal year masks underlying challenges as retailers prepare for peak season amid rising crime costs, regulatory pressures, and household budget constraints that could derail the positive momentum.
The July figures mark the first official release under the ABS’s enhanced Monthly Household Spending Indicator (MHSI), which replaced the Retail Trade publication on 31 July 2025.
The new system provides broader insights into household consumption patterns using aggregated bank transaction and supermarket data rather than business surveys.
All categories experienced year-on-year growth, with ‘other retailing’ leading at 7.6%, followed by cafes, restaurants and takeaway (6.7%), and department stores and large online retailers (6.0%). Food retailing, typically the most stable category, recorded the smallest increase at 2.3%.
New data system
The enhanced MHSI publication includes dollar levels per consumption category with data going back to January 2019, compiled largely from aggregated, de-identified bank data and supermarket transaction data. This eliminates the need for around 3,000 businesses to respond to the previous Retail Business Survey.
The transition represents a significant shift in how Australia measures consumer spending. An ABS information paper released in March 2025 provides guidance on interpreting MHSI data, acknowledging some variance from the previous series methodology.
Queensland led state-level growth at 6.1%, followed by Western Australia (6.9%) and Northern Territory (6.5%). New South Wales, despite having the largest retail market at $11.37 billion, recorded the smallest growth rate at 3.7%.
Peak season concerns
Australian Retailers Association CEO Chris Rodwell welcomed the figures but highlighted mounting industry pressures. “This is a solid start for the new fiscal year and maintains the higher spending trend we’ve seen across 2025,” he said. “The challenge now is to sustain these better trading conditions, recognising that some retailers continue to confront difficult operating conditions.”
Rodwell expressed particular concern for discretionary retailers and smaller operators heading into peak season, when many retailers generate up to two-thirds of their annual profits. Despite the positive spending data, many households remain under intense budget pressures, with inflation staying within the Reserve Bank’s target band.
Crime costs soar
Retail crime now costs the industry at least $9 billion annually, according to crime reporting platform Auror, adding significant operational pressures alongside traditional cost challenges.
“As the ABS crime data reinforced this week, there is also a shocking wave of retail crime around the country, adding a layer of cost and challenge that is unsustainable for retailers,” Rodwell said.
The ARA is advocating for coordinated national action on retail crime while pushing for regulatory reform across payroll tax, planning, freight and logistics, environmental and waste regulation, and trading hours harmonisation.
State variations
The data reveals significant regional variations in spending patterns. Queensland recorded 6.1% growth, while Victoria showed 3.3% growth. Western Australia achieved 6.9% growth, and the Northern Territory reached 6.5%.
Household goods retailing performed strongly with 5.4% growth nationally. The clothing, footwear and accessories sector’s 3.2% growth indicates consumer discretionary spending remains resilient.
Retailers will watch whether the July momentum continues through the critical September-December trading period as they manage operational cost pressures and crime-related expenses. Industry observers noted that retailers have been preparing new strategies for the upcoming peak season amid challenging market conditions.
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