The new year opened with a modest uplift in retail spending compared to the same period last year. The latest data from Australian Bureau of Statistics (ABS) shows consumer spending during January 2025 at 37.08 billion, 3.8 % higher than January 2024.
The 'other retailing' category - which includes cosmetics, sports and recreational goods, saw the most significant increase (up 7% year-on-year), followed by clothing, footwear and accessories, which is up 4.5 % on the same time last year. Spending at cafes, restaurants and takeaways increased 3.8%, food increased 3.1%, spending at department stores rose 2.9%, and household goods rose 2.5%.
Australian Retailers Association (ARA) Chief Industry Affairs Officer Fleur Brown said whilst spending has naturally settled back following the festive season, January's figures are a positive contrast to spending patterns throughout the majority of 2024.
"We are continuing to see a mixed performance across retail categories. Whilst some categories such as clothing and recreation were bolstered by back to school and holiday spending, January is traditionally a quieter month following the festive season and Boxing Day sales.
"Looking ahead, whilst these results are heartening, retail is far from out of the woods. Cost-of-living pressures remain acute and it is likely to remain a challenging year for retail.
"The Reserve Bank of Australia's April decision will be crucial in shaping consumer confidence and trading conditions. Whilst interest rate decisions tend to have a lag effect on consumer spending, we are cautiously optimistic we will see some improved trading conditions ahead."
National Retail Association Interim CEO Lindsay Carroll said the data is a promising result for consumer sentiment, but business conditions remain tough.
"High rates of crime, the increased cost of doing business, the demand to stay competitive, and the lack of sufficient support from governments have created a counterproductive environment for retailers.
"Ahead of the federal election, we are calling on all sides of government to come in on a unity ticket to bolster Australian businesses.
"We urge governments to promote policies that encourage digital transformation in small to medium businesses. AI advancements and technology would help vulnerable businesses combat the growing tide of retail crime.
"Not all businesses have the time or resources to navigate complex regulatory environments. Governments need to cut red tape around compliance measures, especially for small business owners, so they can work on the business and not in the business.
"We are watching business insolvencies continue to rise despite the rate cut delivered by the Reserve Bank in February. Retailers need all sides of government prioritise these issues, so Australia's second largest employer doesn't fall through the cracks."
