Australian retail sales grew 3.3 percent year over year to $37.3 billion in May 2025 from $36.1 billion in the year-ago period, thanks to stronger performance across all categories.
Other retailing, comprised of cosmetics, sports, and recreational goods, grew 4.78 per cent to $5.91 billion, marking the highest sales growth.
Cafes, takeaway, restaurants rose 3.83 per cent to $5.61 billion, followed by department stores which climbed 3.71 per cent to $1.94 billion.
Clothing, footwear, and accessories jumped 3.50 per cent to $3.09 billion while household goods inched 2.81 per cent higher to $5.94 billion.
Food had the least growth of 2.58 per cent, with sales amounting to $14.81 billion.
Chris Rodwell, CEO of the Australian Retailers Association (ARA), noted that May showed promising results for retail, yet consumer spending continues to be modest.
Western Australia recorded the highest growth in sales at 5.6 percent, followed by Queensland at 4.1 percent and Victoria at 4 percent.
South Australia experienced a 3.5 percent increase, the Northern Territory rose by 2.7 percent, and New South Wales by 1.5 percent.
The Australian Capital Territory reported the lowest growth at 1 percent.
“May growth is slightly lower than what we’ve seen in recent months, however performance continues to track modestly above 2024 growth levels. While inflation has metered back, with the CPI figure for May coming in at 2.1 per cent, consumer confidence remains soft,” said Rodwell.
Rodwell said that retail recovery remains distant, which makes the Reserve Bank of Australia’s (RBA) decision on interest rates crucial. The ARA is urging the RBA to reduce interest rates to boost confidence and stimulate spending in the second half of 2025.
“We also know that sales results are only part of the story with retailers continuing to battle higher business costs across leasing, wages, energy, insurance and the supply chain,” said Rodwell.
“That’s why we’re focused on governments doing what they can to improve productivity outcomes and reduce the impacts of regulation and compliance burden. Retailers need to be free to run their business and compete with rising global competition.”
The national retail body emphasises that retail is essential to economic recovery and employs one in 10 Australians. It also argues that a shift from survival to growth in the sector is necessary for economic progress.
As cost-of-living pressures persist, Australians are shifting to online shopping to find bargains.
Online non-food related retail sales are up nearly 11 per cent this year after a period of flat growth, driven by tighter household budgets, stronger online marketing by retailers, and changing habits, especially among younger consumers.
“While today’s monthly figures show many areas of the retail industry remain weak with the overall figure up just 0.2 percent last month, online retailers have enjoyed a strong year compared to traditional brick and mortar stores,” said Terry Rawnsley, Senior Economist at KPMG.
“But in the last month, retail stores are beginning to bounce back, with both clothing, footwear, personal accessory, and department stores enjoying gains as our wardrobes have shifted to winter apparel following unseasonably warm weather in April.”
“Clearly, Australians are still being very cautious with their spending right now and they’re not eating out like they used to. But there is cause for optimism, with the annual turnover retailers rising by 3.3 percent compared to a year ago, pointing to a gradual recovery supported by interest rate cuts.”
Meanwhile, Employment Hero’s May Jobs report reveals a 3.9 per cent decline in average wages in the sector from April to May, with annual growth slowing down more than in any other industry they monitor.
“With inflation down to 2.1 percent, interest rates easing, and more retailers offering EOFY discounts, shoppers finally feel ready to start opening their wallets again. While consumers may be inching back toward discretionary spending, it’s clear that many businesses are still focused on cost control rather than workforce expansion,” said Ben Thompson, CEO of Employment Hero.
“As momentum builds, translating stronger sales into higher wages and broader hiring will be key to a sustainable recovery. Fair, consistent gains for both businesses and workers will underpin confidence in the months ahead. Until then, Australia’s retail workforce remains the canary in the economic coal mine.”
Read more: Retail sales rise 3.8 per cent in April