October rate raise could be final straw for lower income spenders

“The results suggest that cost-of-living pressures may be forcing some consumers to limit their spend on more socially responsible goods,” analyst Camille Wynter said.

Australian Retailers Association boss Paul Zahra said shoppers’ willingness to open their wallets so far this year had been “truly remarkable”, but he acknowledged the sector had not fully seen the impact of rate rises flow through the economy.

“There is likely to be a lag effect from current inflationary conditions,” he said.“We could see a softening of sales as we enter 2023.”

Other major retailers, however, are unfazed about spending in the lead-up to the festive season, expressing optimism that their offerings match consumers’ willingness to spend.

“We are really comfortable with how we are going to deliver our plans for Christmas. We will just focus on what we can control and what we can deliver,” the boss of Peter Alexander and Smiggle owner Premier Investments, Richard Murray, said when discussing the company’s financial results last week.

“We can manage the risks of a slowdown if there is one in the second half… [and] we have to manage it better than our competitors.”

Myer, David Jones and Dan Murphy’s operator Endeavour Group have also expressed similar optimism as August retail spending results released last week show total national sales for the month were up 19.2 per cent on this time last year.

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