It is the first monthly fall in retail turnover for 2022 following 11 consecutive rises, but retail turnover remained elevated at its sixth highest level in the series and was up 7.5 per cent through the year.
“The large fall in December suggests that retail spending is slowing due to high cost-of-living pressures,” said Ben Dorber, ABS head of retail statistics.
“Retail businesses reported that many consumers had responded to these pressures by doing more Christmas shopping in November to take advantage of heavy promotional activity and discounting as part of the Black Friday sales event.
“While there was a strong rise in original terms for December, as is expected in the lead-up to Christmas, this year’s rise in original terms was smaller than those typically seen in past December months. This has led to the large seasonally adjusted fall.”
Turnover fell in industries previously boosted by November Black Friday sales. Department stores had the largest fall, (-14.3 per cent) followed by clothing, footwear, and personal accessory retailing (-13.1 per cent), household goods retailing (-7.8 per cent) and other retailing (-4.6 per cent).
Food retailing was the only industry to record a rise in December (+0.3 per cent), while cafes, restaurants, and takeaway food services were relatively unchanged from November.
Retail turnover fell across all states and territories with the majority down by more than 3.0 per cent.
“The latest Consumer Price Index showed that prices continued to rise strongly in the December quarter. To see the effect of consumer prices on recent turnover growth, it will be important to look at quarterly retail sales volumes which we will release next week,” Mr Dorber said.
The Australian Retailers Association said retail sales were boosted by record Christmas and Boxing Day trading to mark 16 consecutive months of year-on-year growth in December 2022 — a strong increase of 7.5 per cent on the same time the previous year.
South Australia led year-on-year growth (up 10.9 per cent) followed by NSW (up 9.0 per cent) with Victoria also marking a notable increase (up 6.5 per cent).
ARA chief executive Paul Zahra said while the results remained impressive for retail, the margin between inflation and sales growth is narrowing.
“Today’s data marks 16 consecutive months of year-on-year sales growth, which is an enormous achievement for retailers considering the disruption and challenges of the past few years,” Mr Zahra said.
“When you combine the strength of the record November retail sales, predominately driven by the success of Black Friday/Cyber Monday with December retail sales, this would account for a record holiday trade of $70.3 billion.
“Australia saw a bumper Boxing Day spending spree, which bolstered sales to notch an impressive year-on-year increase.
“December’s results remain strong in the face of adversity, with economic headwinds proving to be a hurdle. With inflation hitting a post-1990 peak, it appears to be driving a significant proportion of sales growth.”
Mr Zahra flagged that figures were beginning to stabilise after periods of fluctuation.
“Due to the uneven impact of the post-pandemic recovery across the sector, sales figures have fluctuated quite dramatically. We’re starting to see a return to pre-pandemic trends,” Mr Zahra said.
Meanwhile, the NAB Online Retail Sales Index contracted in December after two months of growth in October and November.
On a month-on-month, seasonally adjusted basis, the return to growth observed from September ended in December with a sizeable contraction (-4.6 per cent) erasing part but not all of November’s gain.
Two categories, takeaway food and media defied the overall result by recording growth. These categories, which represent a smaller share of online retail, were insufficient to offset the fall in larger sales categories.
Weakness in the monthly result was more pronounced in homewares and appliances, fashion, and department stores, which make up about half the index. This partly retraced the gains in October and November. In year-on-year terms, media, takeaway food, department stores, and games and toys continued to grow.
NAB estimated that in the 12 months to December, Australians spent $53.26 billion on online retail, a level that is around 13 per cent of the total retail trade estimate (November 2022, Series 8501, Australian Bureau of Statistics) and almost flat relative to the 12 months to December 2021.
NAB chief economist, Alan Oster, said the result for Q4 relative to Q3 is positive, up around 4.4 per cent.
“This however is nominal, so it’s worth noting that price effects are impacting the result,” he said.
“Although the year-on-year rate appears to be stabilising, cost of living pressures, driven by strong inflation and the impact of higher interest rates, are also likely to temper any resurgence.”
