It reads like bad news for retail – in other words a repeat of the 2023 retail recession with all the signs showing – from high cost of living and elevated interest rates to a weaking labour market.

These indicators suggest that the Australian retail sector has been in recession for the last 18 months with the latest Australian Bureau of Statistics (ABS) retail trade data providing further proof that the economy remains weak.

A retail recession sequel doesn’t necessarily come as a surprise. In six of the last seven quarters, real retail spending has declined, according to Deloitte Access Economics partner, David Rumbens. “Real per capita retail spending has contracted for the last eight quarters and is now 2.5% lower than June 2023 and 6.3% lower than June 2022,” he said.

The professional services group has just released its latest edition of Retail Forecasts.

The latest data shows that real GDP growth over the year to March came in at 1.1%, the slowest annual growth seen outside the pandemic since the early 1990s. Similarly, consumer spending has only grown 1.3% over the past year, Rumbens said.

While these figures are poor, it’s the one-third of consumer spending that goes to retailers that is going backwards, with negative growth of 0.6% in real spending over the year to June.

“The period from now to Christmas is still expected to be a difficult one for retailers, but perhaps less of a slog than it has been. As with most horror sequels, the characters are generally more prepared, and the plots usually more predictable,” he said.

“Retailers are getting used to seeing a consumer group which on average is cautious and value conscious, but where some – generally those older and mortgage free – still have money to spend. A tight focus on cost control, and periodic swing to discounting, remains the mantra. Technology investment is being further explored to drive efficiencies, with retailers’ hiring intentions dropping back.”

Helping to lift retailers out of recession will be the cost-of-living relief that is being rolled out to households in the form of energy bill relief, and tax cuts which have boosted household disposable income.

“We anticipate these measures will stimulate higher levels of consumer confidence and stoke consumer spending. As a result, ‘retail recession – the sequel’ is expected to be short and shallow, with real retail turnover growth expected to strengthen from 0.3% in 2024 to 1.5% in both 2025 and 2026,” he said.