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Australia’s retail sales reach record levels in March amid heightened inflation

Retail sales in Australia reached a record level in March, increasing 1.6 per cent over February, according to figures released by the Australian Bureau of Statistics

Director of Quarterly Economy Wide Statistics, Ben James, said that rising prices, combined with a continued easing of restrictions across the country, have resulted in increases in turnover in all three months of the March quarter.

In March, Australians spent $33.6 billion in stores and online, breaking the previous record of $33.3 billion set in November 2021, when consumers took advantage of Black Friday/Cyber Monday sales and began their Christmas shopping early. 

According to Australian Retailers Association CEO Paul Zahra, the result is phenomenal, but spending challenges loom in the months ahead as cost-of-living pressures impact family budgets.

“We’re in an uncertain economic environment, with cost-of-living pressures starting to bite and interest rates rising for the first time in over a decade. 

“Whilst the top-line performance of retail trade is strong, consumer confidence has fallen significantly this week. We could see more subdued levels of consumer spending in the months ahead as people start to tighten their household budgets,” Mr Zahra says said.

On an m-o-m basis, the strongest growth was seen in ‘Department stores’ retailing (4.1 per cent) and ‘Other’ retailing (4.1 per cent) on a year-over-year basis (15.4 per cent). 

Retail Turnover increased by 1.6 per cent in March 2022, when seasonally adjusted. Retail Turnover increased by 9.4 per cent year on year. 

Except for South Australia, every state and territory saw an increase in sales, with Queensland and New South Wales leading the way following the recovery from flooding and extreme rainfall in late February and early March, according to the ABS.

The table below summarises the key data in seasonally adjusted terms for each ABS retail category.

Australia’s retail sales reach record levels in March amid heightened inflation

Following a historic low in interest rates during the Covid-19 pandemic, the Reserve Bank of Australia (RBA) has raised interest rates by 0.25 to 0.35 per cent, the first increase since 2010, in an effort to cool rising inflation.

The RBA Governor said while the Reserve Bank expects a further rise in inflation in the short-term as supply-side demand is resolved, inflation is expected to return to the RBA’s target of 2 to 3 per cent.

“The central forecast for 2022 is for headline inflation of around 6 per cent and underlying inflation of around 4.75 per cent, by mid-2024,” he said.

“Despite the increased pressure that’s set to be placed on family budgets in the coming months, with further interest rate rises predicted, we’re expecting sales to remain reasonably robust given the high savings rates of Australians throughout the pandemic and the ongoing potential for domestic tourism spending to flow onto retail for the remainder of the year,” Mr Zahra said.

“We’re encouraged by the performance of clothing, footwear and personal accessories, which recorded a 14.3% yearly sales increase, and cafes, restaurants and takeaway food (up 13.2%) – two sectors that have been amongst the hardest hit through the pandemic. We are also pleased to see year on year growth in March for department stores (up 1.3%).

“Whilst it’s pleasing to see record retail sales levels for March, we know that increased consumer prices flowing through the economy have contributed to the result. 

“The eased Covid restrictions have also helped lift sales, and businesses are now able to trade closer to their full potential, with the relaxation of close contact isolation requirements helping to alleviate staffing pressures,”  Zahra added.

Here’s the full statement: ABS Report

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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