June sees worst food retail sales result for year, but not as bad as it seems

Posted by Daniel Palmer on 4th August 2009

Cafés, restaurants and takeaway stores (C/R/TS) recorded their worst monthly sales performance of the year, along with general food retailing – which includes grocers, bakeries, fishmongers and butchers.

On seasonally adjusted figures, the ABS saw both divisions falter, with food retail down 0.7 per cent on May figures and the C/R/TS sector declining 1.7 per cent month-on-month. It was the second time this year that the sectors had recorded a fall in sales, however the declines can largely be linked to reduced food costs rather than declining traffic.

The ABS recently reported a 0.9 per cent fall in the price of food for the June quarter, which could provide an explanation for much of sales drop. Volumes for both food retail and C/R/TS were robust in the June quarter, up 1.3 per cent and 2.3 per cent, respectively.

The Australian National Retailers Association – which represents some of Australia’s largest supermarket chains – said that the flat result for June highlighted that stimulus impacts were fading after a great few months for most retailers.

“The cash handouts were like two shots adrenalin for the retail sector and the effect has almost worn off,” ANRA CEO Margy Osmond said today.

“For the first time since February, retail turnover has dropped,” she added. “ANRA was predicting the cash handouts would run out by the middle of the year, so this result is consistent with our expectations. However, I am a little surprised at the extent of the drop, which is disappointing.”

“We are now not expecting to see a broad pick up in retail turnover until Christmas, provided unemployment doesn’t accelerate.”