The Australian Bureau of Statistics (ABS) has confirmed a bumper Christmas trading period for Australian retailers, with sales increasing 9.6% in December compared to the same time in the previous year.

Australian Retailers Association CEO Paul Zahra said the result indicates the economic recovery is tracking well, despite the Covid threat still lingering.

The figures showed year-on-year increases across major retail categories with household goods up $837 million or 18%, clothing footwear and personal accessories up $221 million or 10% and department stores up $82 million or 5%.

Online sales continue to strengthen, making up 9.1% of total retail sales in December 2020, compared to 6.6% in December 2019.

According to Zahra, while there is a lot of momentum in the market, he expects sales to soften in 2021.

“JobKeeper and the JobSeeker coronavirus supplement are due to end in March, and that may have an impact on consumer spending. As we have seen recently in Western Australia and Victoria, things are very unpredictable. Governments are imposing restrictions and lockdowns with little to no notice as new Covid cases emerge, and that has an impact on business and consumer confidence.

“The virus won’t be immediately stopped in its tracks when the vaccines are rolled out, so we’ll still be living Covid for some time, and some of the existing challenges will remain for retailers,” he said.

National Retail Association CEO Dominique Lamb said that pent up demand following lockdowns and an inability for Australians to travel overseas led to the high levels of discretionary spending.

“The ABS December figures are in line with the NRA’s pre-Christmas forecast that the 2020 festive season would be the biggest on record,” Lamb said. “From Black Friday and Cyber Monday in November right through to the final days before Christmas and Boxing Day, consumers across the country splashed their cash at the shops.”

Western Australian and the Northern Territory recorded the biggest increases each up 17% followed by Queensland with 14% and Tasmania 10%. NSW, Victoria and South Australia each had increases of 9% and the ACT 7%.

While acknowledging these figures are promising, the economy remains unsettled, according to Lamb.

“They bode well for retailers, but as recent lockdowns in Queensland and Western Australian show the economy remains in a volatile state. Until a vaccine is widely administered there will remain a degree of uncertainty and the retail sector will continue to keep its guard up,” she said.