Australian retail spending grew 4.9 per cent in the year to September, slowing from 5.6 per cent in August as households cut back under persistent mortgage and living costs.

Total retail trade reached $39.91 billion over the 12-month period, according to figures released by the Australian Retail Council. The drop in momentum comes just weeks before the critical Black Friday and Christmas trading window, which traditionally delivers the bulk of annual discretionary margins.

Pockets of non-discretionary and experiential spending held up while general merchandise stalled. Other retailing, covering pharmacies and cosmetics, climbed 8.1 per cent over the year, while cafes, restaurants, and takeaway food services rose 7.4 per cent.

Discretionary categories showed sharp deceleration. Department stores and large online retailers recorded turnover growth of just 1.7 per cent, pointing to volume contraction once accounting for higher operating costs. Food retail turnover increased 3.3 per cent, running almost flat against the 3.2 per cent jump in food and non-alcoholic beverage prices measured in the September Consumer Price Index. The figure indicates that grocery growth reflected higher shelf prices rather than larger baskets.

Weakening sentiment is already bleeding into register receipts across major shopping precincts. Consumer confidence fell sharply in September and slid again in October, leaving households with little appetite for full-price holiday shopping.

The Reserve Bank of Australia compounded the pressure by lifting interest rates and downgrading its broader consumption forecasts. 6 per cent forecast.

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