RBA Hikes Not Yet Dampening Retail Spending

The National Retail Association (ARA)/Retail Doctor Group have published their 2022 Consumer Sentiment Report. It reveals that while consumers are changing their consumption behaviour, they are generally optimistic about the upcoming festive spending season.

• The ARA and Roy Morgan are forecasting that pre-Christmas sales will be up 3% on last year, according to The Australian. 250bp of rate hikes year to date appear not to have dampened household expenditure going into year end.
• ARA chief executive Zahra noted that consumers continue to spend and that there is “a sense of prosperity”. He thinks they are working through their savings and holidaying domestically as overseas travel costs are up 30%, reported by The Australian. If these trends continue, then the RBA’s tightening cycle could be prolonged.
• The ARA survey found that 71% of consumers have changed their spending behaviour or plan to because of inflation. The main ways they’ll do this is to cut back on non-essentials and look for more discounts and better prices. People are prepared to reduce expenditure to be able to spend more on special occasions.
• 46% are very or somewhat confident leading up to the Christmas shopping season with 20% expecting to spend more this year than last.

Source: MNI - Market News, ABS, CBA