Australian retail sales rose by 0.3% in March, continuing a trend of modest gains for the third month in a row. The growth was primarily driven by increased food-related spending at supermarkets and grocery stores, particularly in Queensland, where households stocked up in anticipation of cyclone Alfred. Despite this uptick, overall retail sales volumes were flat in the first quarter of 2025, suggesting that consumer spending made little to no contribution to GDP growth during the period.
According to data from the Australian Bureau of Statistics, the slight rise in March came just below market expectations of a 0.4% increase. While food sales rose by 0.7%, other sectors performed poorly—department store sales and spending at cafes and restaurants both declined by 0.5%, largely due to weather-related disruptions and temporary business closures caused by the cyclone threat.
Retail turnover rose across most Australian states and territories, with the Northern Territory posting the largest monthly increase at 0.7%, followed by Victoria and the Australian Capital Territory at 0.6%. Queensland was the only region to experience a decline, falling by 0.4%.
Despite the recent interest rate cut in February and easing inflation, many consumers remain cautious. On a per capita basis, retail volumes actually declined by 0.4%, indicating that household spending remains under pressure. Economists say global trade uncertainties, driven by U.S. tariffs, and upcoming national elections are contributing to weakened consumer confidence.
Nevertheless, the fundamentals for consumption remain relatively sound. The labor market is still tight, and inflation continues to trend downward. Oxford Economics notes that the flat retail volume in Q1 follows a strong fourth quarter in 2024, when aggressive discounting temporarily boosted spending. Looking ahead, further interest rate cuts and additional government support through election promises could help maintain some level of momentum in consumer spending.