It’s a vicious cycle – the Reserve Bank tries to curb inflation by raising interest rates, yet retail businesses continue to discount prices and hold sales to stimulate discretionary spending.

So despite the cost of living crisis, retail turnover continues to be boosted by savvy shoppers taking advantage of sales.

According to the Australian Bureau of Statistics (ABS), retail businesses are relying on discounting and sales events to stimulate discretionary spending, following restrained spending in recent months.

Australian retail turnover rose 0.6 per cent in May, following a 0.1 per cent rise in April.

Robert Ewing, ABS head of business statistics, said that despite the seasonally adjusted rise, underlying spending remains stagnant with retail turnover flat in trend terms.

“Compared to May 2023, trend is only up 1.5 per cent,” he said.

While many struggle to put food on the table, turnover in most non-food related industries still rose in May.

Clothing, footwear, and personal accessory retailing had the largest rise (+1.6 per cent) following two consecutive falls in April and March.

Household goods retailing (+1.1 per cent) and other retailing (+0.2 per cent) also rose, while department stores fell (-0.9 per cent).

“Many retailers started end-of-financial year sales early, offering larger discounts than usual and noted that shoppers remain price-sensitive in response to persistent cost-of-living pressures,” Mr Ewing said.

Perhaps to ease the financial pain, there has been a large rise in liquor retailing (+6.1 per cent), after a large fall in April (-7.4 per cent).  This has driven the recent growth in food retailing. Food-related spending was mixed, with a rise in food retailing (+0.7 per cent) and a small fall in cafes, restaurants and takeaway food services (-0.1 per cent).

“People appear to have returned to usual purchasing habits after opting for cheaper alcoholic products in March, stocking up more than usual in the lead up to Easter, resulting in a lower growth rate in April,” Mr Ewing said.

“Large cultural events continue to impact cafes, restaurants and takeaway food services, with the fall in May a reversal of increased spending associated with LIV Golf Adelaide and the AFL Gather Round in South Australia last month.”

Retail turnover rose across most of the states and territories, with ACT up .7 per cent.

Western Australia (+1.3 per cent) and Victoria (+1.2 per cent) had the largest rises as the only jurisdictions to record growth over 1.0 per cent.

NSW (-0.1 per cent) and South Australia (-0.1 per cent) were the only jurisdictions to have a fall this month, having recorded the largest rises in April.