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Inflationary pressures are set to lift retail spending in the festive season to an all-time high in 2022, with the Australian Retailers Association (ARA) forecasting an extra $2.1 billion will be splurged by consumers and boost pre-Christmas trading to a record $66 billion.
The figure forecast for the traditional November-December Christmas sales period is up from $63.9 billion estimated by the peak retailing body in October, with the updated total representing a 6.4 per cent increase on the same time last year.
However, the ARA concedes much of the increase is due to higher prices, along with an increase in food and hospitality spending.
“These are great results, however, it’s important to acknowledge that price increases are a factor in these numbers and are also driving Australians to spend to get in ahead of inflation,” says ARA’s CEO Paul Zahra.
“Aussies truly plan to eat, drink and be merry this Christmas. It’s no surprise we are seeing a shift towards food and entertaining with the holiday period over the past two years spent in the shadow of lockdowns.
“The news couldn’t come at a better time for the hospitality sector who have endured more pain than most businesses through the pandemic.”
Hospitality spending is expected to surge 28.1 per cent to $9.98 billion, followed by solid increases in department store and food sales of 4.9 per cent and 4.3 per cent respectively.
In a breakdown of spending patterns in each state, the ARA forecasts compiled by Roy Morgan show that NSW, Victoria and Queensland will be the biggest contributors to the spending spree.
Spending in NSW is tipped to hit $20.8 billion, followed by Victoria at $17.1 billion and Queensland at $13.5 billion with the figures in each state up 7.7 per cent, 5.2 per cent and 6.8 per cent respectively.
The research is expecting consumers to ramp up spending on ‘sensory indulgence’ this festive season as alcohol and food top the spending wish-list.
The ARA says men were more likely to indulge in alcohol or food purchases compared with women who will be targeting inexpensive gifts or novelties, clothing, shoes and sleepwear or books and music.
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