Economics | February 8 2017
Aussies spend up on clothes, take-away food
Economic trends & issues
 The Australian Bureau of Statistics (ABS) released retail spending data for December on Monday.
CommSec obtained detailed spending data from the ABS in nominal and real (inflation-adjusted) terms.
The data provides insights on how spending has been changing across the economy.
 In 2016, Aussies spent just over $300 billion on retail goods and activities like food and clothing and
spending at cafes and restaurants. Spending lifted 3.5 per cent in 2016 with prices up 1.3 per cent.
 In terms of actual goods bought, Aussies spent more on clothing, take-away food and online purchases
but less at specialised food shops like butchers and less on newspapers and books.
 The average Aussie spent on average just over $240 a week on retail goods in 2016, up just under $5 a
week over the year. Over the same period the average wage was estimated to have lifted $31.50 a week.
What does it all mean?

How much are you spending on take-away? The latest figures suggest the average Aussie consumer is spending
around $14 a week on take-away and bought nearly 6 per cent more than a year ago – the biggest increase in six
years. In part, it is due to price. The cost of take-away food rose by just 2 per cent in 2016 – that is actually a
RETAIL SPENDING IN 2016
Average
%
weekly spend change
per person
spending
FOOD RETAILING
Supermarkets And Grocery Stores
Liquor Retailing
Butchers, fruit, bread, fish shops
HOUSEHOLD GOOD RETAILING
Furniture, Floorcovering And Textile Goods Retailing
Electrical, Electronic & Gas Goods Retailing
Hardware, Building & Garden Supplies Retailing
CLOTHING, FOOTWEAR AND PERSONAL APPAREL RETAILING
Clothing Retailing
Footwear & Other Personal Accessory Retailing
DEPARTMENT STORES
OTHER RETAILING
Newspapers And Books
Sporting goods, toys, video games
Pharmaceutical Cosmetic And Toiletry Retailing
Other Retailing ( Flowers, antiques etc)
CAFES, RESTAURANTS & TAKEAWAY FOOD SERVICES
Cafes And Restaurants
Takeaway Food Services
TOTAL (INDUSTRY)
$96.62
$80.82
$8.93
$6.88
$42.07
$11.13
$16.07
$14.88
$18.88
$12.66
$6.22
$14.86
$34.24
$2.53
$4.19
$13.02
$14.50
$33.65
$19.64
$14.01
$240.32
2.7
2.6
4.4
1.0
3.3
2.5
1.2
6.5
5.9
7.0
3.7
0.6
5.1
-4.2
2.8
4.3
8.3
4.1
1.6
7.9
3.5
%
change
volumes
%
change
prices
0.6
0.5
3.1
-1.8
2.8
0.4
2.7
4.7
6.2
7.5
3.8
1.1
3.8
-7.5
4.4
4.8
4.9
2.5
0.2
5.9
2.2
2.1
2.1
1.4
2.9
0.6
2.1
-1.5
1.8
-0.4
-0.6
-0.1
-0.5
1.3
3.2
-1.6
-0.4
3.5
1.6
1.4
2.0
1.3
Source: ABS (unpublished), CommSec
Craig James, Chief Economist (Author)
Twitter: @CommSec
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Economic Insights: Aussies spend up on clothes, take-away food
smaller lift in prices than was recorded at supermarkets over the past year.

Interestingly, eight years ago the
average Aussie spent more each week
on clothing than take-away food. Now
take-away food takes up a bigger
share of spending. Price is one
consideration – clothing has become
far more affordable over time – in fact
clothing prices fell again in 2016.
CHANGE IN WEEKLY SPENDING PER PERSON
FOOD RETAILING
Supermarkets And Grocery Stores
Liquor Retailing
Butchers, fruit, bread, fish shops
HOUSEHOLD GOOD RETAILING
Furniture, Floorcovering And Textile Goods Retailing
Electrical, Electronic & Gas Goods Retailing
Hardware, Building & Garden Supplies Retailing
CLOTHING, FOOTWEAR AND PERSONAL APPAREL RETAILING
Clothing Retailing
Footwear & Other Personal Accessory Retailing
DEPARTMENT STORES
OTHER RETAILING
Newspapers And Books
Sporting goods, toys, video games
Pharmaceutical Cosmetic And Toiletry Retailing
Other Retailing ( Flowers, antiques etc)
CAFES, RESTAURANTS & TAKEAWAY FOOD SERVICES
Cafes And Restaurants
Takeaway Food Services
TOTAL (INDUSTRY)
Past
5 years
Past
Decade
$10.77
$9.88
$0.85
$0.03
$5.14
$0.75
$1.15
$3.24
$2.58
$2.12
$0.47
-$0.65
$3.58
-$1.35
$0.32
$1.36
$3.25
$6.15
$4.06
$2.09
$27.58
$25.63
$22.61
$2.97
$0.05
$6.43
$1.45
$1.03
$3.95
$3.40
$2.97
$0.43
-$0.84
$8.71
-$1.28
$0.42
$4.46
$5.12
$11.10
$6.42
$4.68
$54.44

It is clear that Aussie consumers are
spending, but selectively, no doubt
using technology to shop around and
get the best price – either at home or
overseas. Total spending on retail
goods and services rose by 3.5 per
cent in 2016, the slowest calendaryear spending in three years. The
goods and services that were bought
cost 1.3 per cent more than a year ago
and Aussie consumers bought 2.2 per
cent more of a raft of items.

On average each week in 2016 Aussie
consumers spent $240.32 on retail
Change in average weekly earnings
$202.00 $455.20
goods and activities like food, clothing
Source: ABS (unpublished), CommSec
and
spending
at
cafes
and
restaurants. Compared with a year
earlier, that means the average
consumer outlaid an extra $4.81 a week. Notably however we estimate that the average weekly wage (average
weekly ordinary time earnings) lifted by $31.50 over the same period. So clearly Aussie consumers had enough
extra dollars to cover spending on the essentials before turning their attention to other bills such as rent,
mortgages and medical costs.

In terms of actual goods purchased (volumes), Aussie consumers elected to buy more clothes, with real (inflationadjusted) spending up 7.5 per cent. Over the year the price of clothing fell by 0.6 per cent.

Aussies also spent more on take-away food, chemist-type goods like cosmetics as well items from smaller
retailers such as online stores, second-hand retailers and flowers retailers.

The ABS data also indicates that Aussies spent less at “specialised” retailers such as butchers and bakers while
also spending less at newspaper & book retailers.
The affordability debate

One of the interesting issues at present is the debate on housing affordability. Budding home buyers in Sydney
and Melbourne fear that home ownership will remain outside their grasp given rising home prices. Of course
budding home buyers in regional Australia and in the west and north of Australia would have fewer concerns
about housing affordability given record-low interest rates and slower growth in home prices.

Affordability clearly differs with the type of good being purchased. At present housing affordability is perceived a
February 8 2017
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Economic Insights: Aussies spend up on clothes, take-away food
problem but affordability of a raft of items like food,
clothing, cars and overseas travel is at or near the best
levels recorded. Clearly affordability will vary markedly
depending on the wage or income received and how that
is changing over time.

But importantly in the current debate, many consumers
are paying out relatively less of their income on essentials
like food, clothing and transport, allowing extra dollars to
be allocated to housing. And as the Reserve Bank noted
yesterday, rents are growing at the slowest pace in
decades. So those renting have the ability to save more
and potentially put it towards a deposit to buy a home.

Over the past five years, weekly spending on retail goods
per person rose by $27.58 while the average weekly
wage rose by $202.00. And over the past decade, weekly
retail spending per person rose by $54.44, while the
average wage rose by $455.20.
Total consumer spending

The final figures for total consumer spending for the entire 2016 year won’t be published until early March. But the
latest data shows that the average consumer spent $765.31 a week on all goods and services including cars,
electrical bills and medical costs for the twelve months to September. Total consumer spending rose by $25.31 a
week over the period, still short of an estimated $31.50 lift in the average wage over the same period.
What are the implications for investors?

Consumer spending drives the Australian economy, accounting for 57 per cent of gross domestic product (GDP)
in the September quarter. So the fact that retail spending lifted 0.9 per cent in the December quarter is important,
suggesting that household consumption may have contributed as much as 0.5 per cent to economic growth in the
quarter. Certainly the Reserve Bank noted yesterday that “A return to reasonable growth is expected in the
December quarter.”

Consumers are spending, but relatively cautiously. As a result, retailers must constantly revise strategy,
especially as competition has increased from home and abroad. A number of clothing retailers have been placed
into administration recently, especially at the upper end of the market. Competitors have lifted the quality of their
products but not prices, and are exploiting opportunities where established retailers haven’t built brand loyalty.

While home prices have posted firm gains in some cities, the strength of the gains has been far from uniform. So
housing affordability differs markedly across the country. But with affordability of many other essential items
improving, consumers have extra dollars and choice in terms of their housing options.

Consumers are constantly updating their priorities. At the same time relative prices are changing, also causing
changes to the type and amount of goods purchased. The Aussie consumer is in good shape at present because
real incomes and wealth are rising, but retail margins will remain under pressure because competition is now
global, rather than largely local.
Craig James, Chief Economist, CommSec
Twitter: @CommSec
February 8 2017
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