Australian Retail Sales: May 2023 - Promotional activity holding up sales
About the author:
- Author name:
- By Alexander Mees
- Job title:
- Co-Head of Research and Senior Analyst
- Date posted:
- 30 June 2023, 7:00 AM
- Sectors Covered:
- Gaming and Retail
- Australian retail sales in May 2023 were up 0.7% month-on-month (m/m), which was above consensus forecast of a 0.1% increase. Sales were 4.2% higher than in May last year, which is in line with the annual rate of growth in April. With headline CPI running at 5.6% in May, ‘real’ retail sales were down -1.4% in May, which was better than the -2.6% decline in April.
- The best performing category on a m/m basis was ‘Other Retailing’, a mixed bag that includes online-only retailing, florists and pharmaceutical and cosmetic retailers. Growth was driven largely by consumers taking advantage of increased promotional activity during the month.
- Food inflation continues to persist with ‘Eating Out’ the second strongest performer on a m/m basis (+1.4%) and the strongest performer on a y/y basis (+12.7%).
Retail sales were up 0.7% month-on-month in May
Preliminary data from the ABS show that Australian retail sales were A$35.5bn in May, which was up 0.7% on April, and ~1% below the record monthly high of A$35.8bn in November 2022.
On a geographic basis, all states and territories except for Tasmania (-0.1%) grew on a m/m basis, with the best growth in the Northern Territory (+1.6%), followed by the ACT (+1.4%).
Overall sales were up 4.2% year-on-year
Retail sales were up 4.2% y/y, which was the same rate of y/y growth as April.
Annual growth continues to trend below inflation (5.6% in May, 6.8% in April) which suggests that transaction volumes are in decline.
Uplift driven by promotional activity, whilst food inflation persists
‘Other Retailing’ was the strongest category on a m/m basis, up 2.2%. This was driven largely by consumers taking advantage of the increased promotional activity during the month. Whilst sales have held up, we are left to question how much margins were affected by increased discounting.
Food inflation continues to drive sales growth in the ‘Eating Out’ and ‘Food and Drink’ categories. On a m/m basis ‘Eating Out’ was the second strongest performer (+1.4%) and continues to be the strongest on a y/y basis (+12.7%).
‘Household Goods’ remains the weakest performer on a year-on-year basis
Household goods spending grew 0.6% m/m, but was still the only category that had negative growth on a y/y basis (-4.4%).
Figure 1: Retail sales (A$m)
Source: Morgans, ABS
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