National retail spending rose 3.6 per cent year-on-year in March 2016, according to the latest Australian Bureau of Statistics (ABS) figures.

Total retail spending was $24.95 billion in March, up from $24.85 billion in February, representing a 0.4 per cent increase on a monthly basis.

Russell Zimmerman, Australian Retailers Association (ARA) executive director, said the soft sales figures are a sign that the retail sector is still facing challenges. With the pending federal election also weighing on sales and confidence creating uncertainty, business and consumers are looking for real economic leadership, he said.

“Overall, the sales figures in March illustrate that consumers are still holding on to their purse strings and discretionary spending remains tight with there being little doubt an extended Indian Summer has impacted on department store sales with deflation hitting food sales,” Zimmerman said.

In monthly seasonally adjusted terms, there were increases in food retailing, 0.6 per cent; clothing, footwear and personal accessory retailing, 1.1 per cent; other retailing, 0.4 per cent; and household goods retailing, 0.1 per cent. Turnover in cafes, restaurants and takeaway food services was relatively unchanged, 0.0 per cent. Department stores fell, -0.5 per cent.

“Overall, the figures may be a reflection of consumer nervousness in discretionary spending due to instability with the federal election and weak indicators from overseas. The federal election couldn’t come soon enough to restore certainty,” said Zimmerman.

Zimmerman said the boost from the RBA interest rate cut along with federal budget tax cuts are what the doctor ordered to boost consumer and business confidence.

“Retailers are facing significant cost pressure at the moment with this week’s federal budget and interest rate cut being a positive, we are also needing the government and opposition to step in and increase consumer confidence by showing strong economic leadership and reform as part of their election campaigns,” he said.

NRA industry research and data analyst, Cameron Meiklejohn, said the growth rate is a continuation of what the industry recorded in January and February.

“We have seen below-average growth in March, which suggests that there continues to be some level of caution in consumer spending,” Meiklejohn said.

“At a national level, there is still strong growth in some categories with clothing and fashion, 7.9 per cent; and hardware, building and garden supplies, 6.2 per cent, both performing well.”

Meiklejohn said the ABS statistics revealed a clear difference between New South Wales and Victoria, and the rest of Australia.

“While the national average growth rate is 3.7 per cent, we’re seeing that sales in NSW and Victoria are growing at a far greater rate, with growth of five and 4.7 per cent respectively,” he said.

“The National Retail Association is still anticipating annual sales growth of 4.4 per cent in 2015/16, and as a result we are expecting to see an improvement in turnover across the final quarter of this financial year,” Meiklejohn said.

In monthly seasonally adjusted terms, there were rises in Victoria, 0.5 per cent; New South Wales, 0.4 per cent; Western Australia, 0.7 per cent; Queensland, 0.2 per cent; South Australia, 0.2 per cent; and Tasmania, 0.6 per cent. There were falls in the Australian Capital Territory, -0.6 per cent, and the Northern Territory, -0.2 per cent.

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