Cash-strapped shoppers snapped up discounted gifts during the Black Friday sales, bringing spending forward and leading to a muted December for retailers.
Australian retail sales plummeted 2.7 per cent in the final month of 2023, more than unwinding the 1.6 per cent rise fuelled by the snowballing popularity of the Cyber Weekend sales.
Compared with 2022, spending as measured by the Australian Bureau of Statistics grew by a lacklustre 0.8 per cent.
Head of retail statistics at the bureau, Ben Dorber, said consumers brought forward some of their usual December spending to November to take advantage of Black Friday sales.
Unsurprisingly, all non-food categories were down, with substantial falls in household goods retailing, down 8.5 per cent, and department stores declining 8.1 per cent.
Clothing, footwear and personal accessory retailing sank 5.7 per cent, and other retailing fell 1.1 per cent.
Turnover also fell 1.1 per cent in cafes, restaurants and takeaway food services in December, with food retailing up 0.1 per cent - the only industry to post growth.
The November sales have been shifting end-of-year spending habits over the past few years and economists expected the phenomenon to intensify under high living costs.
Yet the contraction was still more severe than the 1.6 per cent fall that was pencilled in.
Moody's Analytics economist Harry Murphy Cruise said the November sales period was making it hard to discern how well consumers were faring under high inflation and elevated borrowing costs.
He said the ABS adjusts its data to account for the different ways households spend throughout the year but it was challenging to keep up with such rapid change.
"This could take several years to fully wash through," he wrote in a note.
But when the big swings towards the end of the year were stripped away, retail sales growth had clearly "slowed to a crawl", with the trend figure up just 0.1 per cent over the month of December.
Falling household disposable incomes when controlled for inflation, population growth, taxes and mortgage payments suggest everyday Australians are feeling the pinch.
Deloitte Access Economics estimates a nine per cent peak-to-trough decline in real household disposable income per capita, with the end of pandemic-era support payments and reopened borders helping to explain the steep contraction.
Though the economics group expects real household disposable income per capita to remain below trend for at least the next five years.
"That means economic conditions will keep feeling pretty tough for a while yet," Deloitte Access Economics partner Stephen Smith said.
The National Retail Association said the insipid December retail trade result suggested the Reserve Bank had lifted interest rates too high.
"The parched figures show that consumers had no money left to spend after Black Friday and Cyber Monday sales," association director Rob Godwin said.
The sluggish holiday season had forced retailers of all sizes to cut headcount or close up shop, he added.
"Now that spending has all but stopped, we ask that the Reserve Bank start cutting interest rates at their monetary policy meeting next week."
