Higher interest rates and cost-of-living pressures are forcing households to ease up on non-essential spending, with new data showing retail sales have not grown at all in five months, despite modest gains in February.

Retail sales increased 0.2 per cent last month, according to data released by the Australian Bureau of Statistics on Tuesday.

“On average, retail spending has been flat through the end of 2022 and to begin the new year,” Mr Dorber said.

“Spending in food-related industries continued to grow steadily in February, with cafes, restaurants and takeaway food services up 0.5 per cent, while food retailing rose 0.2 per cent.

“Non-food industry results were mixed as consumers continue to pull back on discretionary spending in response to high cost of living pressures.”

Hospitality still strong

Commonwealth Bank chief executive Matt Comyn said internal bank data showed spending remained strong in areas such as hospitality, while parts of the retail sector were experiencing weaker conditions.

BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said future RBA interest rate decisions were “lineball”, meaning each data point was being increasingly scrutinised for signs that higher interest rates were having their intended effect.

“There is nothing too surprising in these data about how the anticipated slowdown in consumer spending is unfolding,” he said.

“There are signs that goods price inflation is cooling, as is consumer spending more broadly. But the ongoing pickup in hospitality spending is a sign of persistence in services demand and inflation.”


Read the full article here >>> Consumers hit pause on retail spending, Australian Bureau of Statistics data on sales show, as RBA interest rate decision looms (