Black Friday Anticipation: October Retail Falls 0.2%
28 Nov 2023
October retail sales in Australia decline as consumers hold out for Black Friday.
Australian retail spending took an unforeseen dip in October due to persistent inflation and the impact of elevated interest rates. Consumers refrained from significant purchases, anticipating the Black Friday shopping event in November.
According to data from the Australian Bureau of Statistics (ABS) released on Tuesday, retail sales declined by 0.2% in October compared to the previous month. This result fell short of the anticipated 0.2% growth and represented a turnaround following a 0.9% increase in September.
Retail sales dropped across all sectors except for food, although the rate of growth in food retailing decelerated due to increased inflation, leading consumers to spend less on restaurants and cafes.
Despite this, the overall retail expenditure remained in proximity to record levels, totaling A$35.76 billion. Australian retail sales had reached an all-time high of A$35.89 billion in November 2022, primarily attributed to the growing popularity of the Black Friday event in recent years. This event, taking place on the first Friday following the U.S. Thanksgiving holiday, is characterized by significant discounts on retail products.
The ABS noted that consumers may have refrained from significant spending in October, anticipating the upcoming event in November.
Ben Dorber, Head of Retail Statistics at the ABS, commented, “It appears that consumers opted to temporarily curtail discretionary spending in October, possibly in anticipation of leveraging discounts during Black Friday sales events in November. This aligns with a trend we’ve observed in recent years as Black Friday sales gain increasing popularity.”
Australian retail expenditure has shown considerable resilience throughout the year, partly attributed to a robust labour market. This factor has significantly contributed to inflation, and the October data indicates that inflation may persist in the coming months. A monthly report on Australian consumer inflation is scheduled for release on Wednesday.
Persistent inflation is anticipated to prompt further interest rate increases from the Reserve Bank of Australia, as Governor Michele Bullock recently cautioned about this possibility. The bank had raised rates by 25 basis points to 4.35% earlier this month.