Australian retail sales rose 5.5% in January 2026, a slight softening on recent trends, but still highlighting a strong consumer. Café, takeaway and restaurant sales rose 9.3%, clothing and footwear was up 6.5%. Once again supermarkets and liquor were the laggard at 3.5% growth. The reality is that sales growth momentum is likely to slow, but the January 2026 update is a reminder that the slowdown is likely to be gradual over the next six months.

What we’re hearing and seeing in retail

• Petrol prices: Petrol prices are likely to rise 15-35 cents to $2.00-$2.20 a litre. A 31-cent rise in petrol prices is equal to a 25bp rate hike, and a 50-cent rise could lower retail spending by 1.4%. Categories impacted first are high frequency purchases including supermarkets, liquor and pharmacies.
• Housing market: Housing retail categories have been strong and recent auction volumes are still up 17% over the past four weeks. We expect the slowdown in Housing retail to be gradual over a six-month horizon.
• February 2026 softer: Based on ASX retailer feedback and other industry contacts, growth rates have slowed in February, compared with January.

Sub-sector insights

• At home food and liquor: Total food and liquor sales rose 3.5% in January 2026. For the first seven weeks of 2026, Woolworths sales were up 5.8% and Coles was up 3.7%. The industry growth for supermarkets was likely close to 3.8%. Aldi lost market share. Liquor is softer at close to flat sales. Coles is losing share. Endeavour is gaining share.
• Cafes, restaurants and takeaway food: Sales rose 9.3% in January 2026, an incredibly strong result and indicative of a confident consumer. Growth should remain strong for another three months or so.
  Household goods: Household goods grew 4.2%, holding the December rate of growth. Nick Scali orders grew 3.1% and Harvey Norman comparables sales were up 3.6% in January 2026. JB Hi-Fi Australia comparable sales grew 2.4% and The Good Guys 2.7% in January.
• Department stores: Department stores sales rose by 4.8%. Comments from Kmart/Target suggest it was growing at ~4%. Big W was flat for the first seven weeks of 2H26e with commentary of improved quality of sales.
  Clothing & footwear: Clothing and footwear sales increased by 6.5%. This is strong relative to trading updates from Accent Group of flat, Universal Store at 7.1% and Country Road Group 1.6% for the first eight weeks.
• Other retailing incl recreational goods: Other retailing was up 8.0% in January 2026. The category includes pharmacy, which has seen high single-digit growth. Online pure play retailers also push up the growth rate.
  Online spending: The data for online is lagged and lacking for January 2026. Online trends have been strong at circa 12-15% in recent months.
• Non-retail spending: One of the more fascinating insights about recent consumer spending trends is discretionary spending is outpacing staples spending. A reminder that cost of living pressures have eased. The stronger discretionary categories have been clothing & footwear and recreation & culture.