Spending cash donations to carry Christmas 2023 ahead of 'smarter wallets'

Spending cash donations to carry Christmas 2023 ahead of ‘smarter wallets’

Australians are shedding the rising cost of living and hitting the shops in droves ahead of the Christmas holidays, with November turning into the busiest month of the year.

The Deloitte analysis released on Wednesday night highlighted a “yawning gap” between retail spending and weak consumer confidence ahead of Christmas, with little sign so far that the fastest rise in interest rates since the 1990s is prompting households to tighten their wallets to tighten.

Consumers are paying more in stores as inflation soars, driving up spending, but even taking this into account, Deloitte says activity in Australia’s malls is still strong.

It followed KPMG forecasts on Wednesday that consumers will spend as much – if not more – during the Black Friday and Cyber ​​Monday shopping holiday in November than they did last year.

Lisa Bora, head of retail at KPMG, said the stage is set for more than $33 billion worth of spending, in a continuation of a trend that saw the holiday shopping rush started earlier in the year.

She said consumer spending is unlikely to slow until 2023, when a Christmas hangover is likely to hit consumers hard when the impact of rising interest rates and inflation finally begins to seep through.

“Retail is not slowing down now. We will have a strong experience by the end of the calendar year,” Ms. Bora said.

“Strong Swing”

Ms Bora said pent-up demand from the COVID-19 pandemic is still fueling strong consumption despite the impact of rising inflation and rapid interest rate hikes on the budget.

“We’ve been lucky, we’ve had strong job and income growth and we’ve benefited from increased household savings,” Ms Bora said.

“That’s wearing off, but we think the remaining savings will last us into the new year…there’s still a lot of optimism in the market.” Holiday spending should be good and we’ll see sooner.”

Card spending data from the Australian Retailers Association released on Wednesday showed spending across the sector up 32 per cent year-on-year, with chief executive Paul Zahra saying the industry’s recovery from lockdowns in 2020 and 2021 has been remarkable.

“Retail sales continue to go from strength to strength,” Mr Zahra said on Wednesday.

“It’s gratifying to see many retailers building strong momentum as they enter their most critical time of the year – our Roy Morgan Christmas sales forecasts show Australians to spend close to $64 billion in the run-up to Christmas, 3rd December percent more than last year. ”

holiday hangover

Experts are predicting retail spending will continue into January, when a holiday hangover is likely to result in a “wallet directive”, Ms Bora said.

“We will see a lot more normalization [in spending] in the new year.”

Deloitte agrees, noting in its Wednesday night forecasts that consumption will slow once the impact of higher interest rates begins to weigh on household budgets.

“Increasingly, rate hikes will bite and consumers will have to tighten their wallets from here,” said Deloitte economists.

“These weaker consumer spending and export prospects, combined with a housing market experiencing the full impact of rising interest rates, are likely to define the outlook for the domestic economy in the near term.”

The slowdown is being closely watched by the Reserve Bank, which is hoping higher interest rates will dampen consumer demand and hence the pace of inflation, as outlined at its latest monetary policy meeting.

“While consumption has held up so far, monetary policy has been lagging and there was a risk that household spending could be adjusted more than expected,” the RBA said in its October meeting minutes released on Tuesday.

“Higher interest rates and higher inflation put pressure on household budgets and consumer confidence had fallen.”


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