Australian retailers face a potentially less jolly Christmas season due to a spike in inflation and reduced expectations of interest rate cuts, according to Deloitte Access Economics. Partner David Rumbens noted that the September quarter inflation surge, compounded by October’s figures, has impacted household purchasing power and diminished hopes for immediate rate cuts. This has led many to desire ‘good inflation data’ as their top Christmas wish. Additionally, a stagnant labour market may introduce concerns about job security, further affecting consumer sentiment.
Despite these challenges, Rumbens observed that Australians have been proactively seeking value, capitalising on early sales. The Black Friday sales event, now often extended to a month-long promotion, has made November a crucial period for Christmas shopping. This suggests that consumers are still willing to spend, but are increasingly price-conscious.
While the immediate outlook appears subdued, Deloitte forecasts a return to stronger retail growth in the coming years. As economic conditions stabilise, sustained real wage growth and improvements in the cost of living are expected to empower consumers to spend more freely.
Deloitte Access Economics provides economic analysis and advisory services to businesses and governments. They are part of Deloitte Touche Tohmatsu, a global professional services network.
