ABS Retail Trade figures for May 2008, released yesterday, indicated that there is still some resistance to the rising cost of living by consumers.ANRA (Australian National Retailers Association) CEO, Margy Osmond, believes the figures, while more positive than in recent months, are still worrying for some retailers. “Retail turnover has picked up, rising by 0.7 per cent in May. This is the best result by far for the year to date,” she said. “Consumer spending has been strongest around smaller personal purchases. So rather than a holiday away or expensive new clothes, it may be a book, a new lipstick or something second hand or antique for the home.”

In real terms, the first five months of 2008 have seen growth in the sector slide as consumers react to the pressures of rising fuel prices and interest rates. Ms Osmond reports that consumers are still uncertain about the future and the next year may still prove difficult for those in retail trade. “Consumer sentiment is cautious. A host of polls confirm that many consumers expect to have to tighten their belts further over the next 6 to 12 months,” she advised. “ANRA’s post Budget polling suggests that income tax cuts will be largely used by consumers to reduce debt or will be saved.”

Food retail experienced a more positive May than April, with a 3.7 per cent rise in sales for the month. More importantly, the seasonally adjusted figure rose by 1 per cent – the second highest such rise in the year, and markedly better than last month’s figure of -1 per cent. The figures paint a much brighter picture than some expected but with food inflation being so high in the past year some food retailers are still struggling.

ANRA identified South Australia as one of the key drivers of weak trend growth in the industry with the eastern states struggling to some extent. “Unfortunately, the larger eastern States are really in the doldrums. There is no sign of a sudden recovery in retail spending in these key States,” Ms Osmond concluded.

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