Festive retail sales reach a record-breaking $74.5bn as Australians hit the shops

Data collected by the Australian Retailers Association and Westpac shows a festive season spending splurge that defied all expectations, reaching a record-breaking $74.5bn.

Despite fears about the rising cost of living and further interest rates in the new year, Australians have spent record sums this Christmas season. Picture: Getty Images

Australians could be nursing a new year hangover from frenetic Christmas spending at department stores, cafes and restaurants, with some analysts viewing the big increase in retail spending as the last hurrah before the reality of higher interest rates and spiking energy bills hits households.

While the Reserve Bank will not be meeting in January, back-to-school costs, rising mortgage payments and higher energy bills will start to flow through to household budgets soon, likely bringing to an end the run of pre-Christmas consumer spending.

The latest data collected by the Australian Retailers Association and Westpac shows a festive season spending splurge that defied all expectations, reaching a record-breaking $74.5bn – up 8.6 per cent on last year.

According to figures from the ARA in partnership with Westpac DataX, Boxing Day trading also recorded unprecedented growth – up 15.3 per cent from last year – to a massive $1.23bn spend for the day.

Chantelle Potgieter with her daughter Megan at Sydney’s Pitt St Mall. Picture: Britta Campion

While economists believe that about two thirds of that higher spending can be explained by rising inflation – meaning we paid more for the same goods and services – there was also a lift in the volume of purchases by consumers heading in to the new year.

“This is without a doubt the biggest festive season spend on record – it is unprecedented,” said ARA chief executive Paul Mr Zahra.

“It is remarkable that in this ­period of economic turbulence, traders have well and truly smashed it out of the ballpark as consumers revelled in ‘freedom’ spending,” he said.

“An unrivalled $74.5bn spend leading up to Christmas still didn’t diminish the spending appetite of Aussies leading into the year’s marquee retail savings event.

“The past three years have been incredibly challenging for everybody – and retail traders were certainly no exception. The resilience and agility of the industry has been remarkable.

“The success shared by department stores, in particular, is truly outstanding, defying many predictions by commentators.”

Australian Retailers Association CEO Paul Zahra.

Mr Zahra said according to the data collected by Westpac, department stores drove the greatest sales growth on Boxing Day – up 23.6 per cent on last year – to reap $149.4m. Cafes, restaurants and takeaway food services were up 22.8 per cent, and clothing and ­apparel were up 19.8 per cent.

Mr Zahra said Boxing Day in particular was about “saving money” and could reflect a growing concern among households as they enter the new year and face tightening budgets due to interest rates, energy and the cost of living.

“Boxing Day has different dynamics; Boxing Day is about saving money,” he said.

“So if you think about it, people under household budget pressure are saying well actually, what do I need that I can buy at a discount now and save some money.”

Jade Clarke, the head of Westpac DataX, said spending remained strong despite the rising cost of living: “The data shows that despite a year of increasing living costs, Australian retail sales have remained strong over the holiday period, improving on last year.”

Student Anne Hollerich shopping at Sydney’s Pitt St Mall. Picture: Britta Campion

Sydney’s Pitt Street Mall was bustling on Thursday with shoppers eager to snap up discounts in festive season sales, hoping to beat the inflation crunch.

Psychology student Anne Hollerich said she had splashed some Christmas cash, but admitted she had not paid much attention to inflation until she looked to book flights home to see her family in Luxembourg for Christmas.

“It cost so much – thousands and thousands – to get home; it was just too expensive,” she said, so she is now spending new year in Sydney and her first festive season away from home.

New shoes, pyjamas, and beauty products were popular items snapped up by shoppers, with some saying they were getting their shopping done now before they face higher prices back home.

But for mother Chantelle Potgieter, shopping with her daughter Megan, 16, she can already feel the inflation crunch. “Every time I go to shop for groceries it costs 30 per cent more, no matter how I try to plan it,” she said. “I might not be thinking about it while we’re out spending Christmas money now, but you can tell it (inflation) does already have an impact.”