Consumers spent almost $34bn at the shops in March to set a new record

Australians sitting on almost $240bn in pent-up savings have started to spend the mountain of cash to set a retail turnover record for March.

Consumers spent almost $34bn at the shops in March, a new record, with spending on department stores, restaurants, cafes and takeaway among the strongest retail categories. Picture: Lisa Maree Williams/Getty Images)

Australians have taken a large chunk out of the estimated $240bn in pent-up savings stored up through Covid-19 and spent it at department stores, dining at restaurants and getting takeaway meals over March to generate the highest level of monthly retail sales on record.

The Australian Bureau of Statistics released the latest retail turnover figures on Wednesday, revealing that March trade rocketed 9.4 per cent on a year ago to a record $33.6bn, with retail trade up 1.6 per cent in March after rising 1.8 per cent in February and lifting by 1.6 per cent in January.

The overall spend of $33.6bn in stores and online in March, eclipsed the previous record of $33.3bn set in November 2021, when consumers enjoyed the Black Friday/Cyber Monday sales and were shopping early for Christmas.

While higher shelf prices lifted by the gathering pace of inflation across Australia has helped deliver the record result in March, strong volume of sales looked to be supported by a strong job market and rising wages.

In terms of retail categories, spending rose by the most for department stores (up 4.1 per cent), followed by household goods retailing (up 3.4 per cent), cafes and restaurants and takeaway food services retailing (up 2 per cent) and food retailing and clothing, footwear and personal accessory retailing (both up 0.5 per cent).

By state and territory, Queensland was the strongest state, with sales up 3.4 per cent, leading 1.8 per cent sales growth in New South Wales and 0.6 per cent in Victoria. South Australia bucked the national trend and saw sales decline by 0.7 per cent.

Australian Retailers Association chief executive Paul Zahra said it was a “phenomenal result”, however spending challenges loom for the months ahead as cost-of-living pressures begin to impact family budgets.

“We’re in an uncertain economic environment, with cost-of-living pressures starting to bite and interest rates rising for the first time in over a decade. Whilst the top line performance of retail trade is strong, consumer confidence has fallen significantly this week and we could see more subdued levels of consumer spending in the months ahead as people start to tighten their household budgets,” Mr Zahra said.

JP Morgan economic analyst Tom Kennedy said he retained the view that the combination of low unemployment, strong economic momentum and an elevated saving rate will support household consumption in the coming months.

“Though also highlight that rising mortgage rates and increasingly negative sentiment surrounding the housing market will start to weigh on spending behaviour to an extent,” he said. “Accordingly, our bias is for retail spending growth to moderate through the remainder of the year, with real GDP growth converging toward trend by 2023.”