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Retail sales were up 11.1 per cent in June with all categories recording increases.
But the positive sales figures hid the increasing pressures that retailers are facing, according to the chief executive of the Australian Retailers Association.
The Mastercard SpendingPulse™, which measures in-store and online retail sales across all forms of payment found that sales growth was led by fuel and convenience (up 23.1 per cent), jewellery (up 23.2 per cent), lodging (up 17.9 per cent), home furnishings (up 6.5 per cent), electronics (up 4.8 per cent) and apparel (up 2.4 per cent).
Australian Retailers Association CEO Paul Zahra said while sales are increasing, it is not a full reflection of sector performance with rising labour costs, rents, fuel and energy costs and supply chain constraints all adding to the cost crunch for business.
“The performance of the retail sector is not just marked on sale volumes. We are operating in an inflationary landscape, where consumer prices are increasing, which impacts overall retail trade numbers,” he said.
“This is creating a perception that the sector is thriving. However, many businesses are severely challenged by rising operating costs associated with labour, fuel, energy, supply chains and rents.
“While consumers are impacted by the rising cost of living, the rising cost of business is in many cases more severe. The economic outlook also has many business owners feeling nervous, as rising interest rates begin to take hold and some natural belt tightening occurs with mortgage holders.
“The household savings rate remains above pre-Covid levels, which will cushion some of the inflationary impacts consumers are experiencing. However, when people rein in spending, discretionary purchases are the first things they cut out.
“We remain optimistic the retail sector will be able to weather the current economic headwinds and the rising cost challenges. However, we need to acknowledge that just because overall sales are up, it does not necessarily mean that retailers are doing well. As they have through the pandemic, many retailers continue to reduce inflationary shocks for their customers by absorbing some costs, which of course affects their margins. And passing on cost increases has impacted their volumes.”