Fashion sales have risen by 14.4% in January 2022 across Australia compared to the same time last year, according to the latest Mastercard SpendingPulse, which measures in-store and online retail sales across all forms of payment.

Overall retail sales were up by 6.3%, with the largest increase seen in the lodging sector of 15.9%.

Restaurants (up 8.8%), jewellery (up 8.4%) and grocery (up 6.3%) also recorded solid growth

Electronics (down 3.2%) and home furnishings (up 0.9%) slowed after strong growth during the pandemic and have been the first categories to soften in retail spending.

Australian Retailers Association CEO Paul Zahra said the results – whilst positive overall – also reflect the growing impact of price inflation in some categories (grocery) and a slowing down of high spending in some covid impacted categories (home) in previous years.

“These are solid results in a challenging economic environment where we are seeing consumers becoming more value orientated, taking advantage of the Boxing Day sales,” Zahra said.

“We also saw many Australians celebrating their freedom over the holidays ahead of the cost-of-living pressures biting.”

Zahra said it’s clear the current macroeconomic environment is becoming a challenge for businesses, particularly smaller business, as they navigate rising operating costs in fuel, energy, labour, supply chains, rent and increasing debts, with further interest rate hikes on the agenda ahead.

“Traders have had a greater capacity to absorb these rate increases while spending has remained robust,” Zahra said. “But when spending slows – it will take a hefty toll on retailers, particularly small-scale mum-and-dad businesses.”

Zahra reiterated that the retail industry is a barometer of the wider Australian economy.

“As a $400 billion sector that employs one in ten Australians, retail is vital in holding the economy together.”