Retail spending increased 12.5 per cent in October as consumers spent $35 billion both in-store and online according to new data from the Australian Bureau of Statistics (ABS).

While year-on-year sales growth was strong, retail turnover fell by a marginal 0.2 per cent compared to September, marking the first month-on-month fall this year.

Clothing, footwear and personal accessories sales were up 32.8 per cent while cafes, restaurants and takeaway food services increased by 35.3 per cent.

Department store sales grew 23 per cent followed by other retailing at 9.3 per cent and household goods and food retailing at 5.9 per cent and 5.2 per cent respectively.

Australian Retailers Association CEO Paul Zahra described some “softening of sales”as inevitable as consumers encounter cost-of-living challenges.

“It is important to acknowledge that price increases are a factor in these numbers and are also driving Australians to spend to get in ahead of inflation.

“We haven’t yet seen the forecast inflationary peak, and we anticipate a softening of sales next year.”

Zahra added the rising cost of doing business, supply chain disruption and staff shortages are top concerns for retailers currently as businesses enter one of the busiest periods of the year.

By state, the ACT led with the highest growth in retail turnover at 24.9 per cent followed by Victoria at 19.6 per cent, NSW at 11.6 per cent, SA at 9.9 per cent, Queensland at 9 per cent, WA at 7.7 per cent, Tasmania at 6.4 per cent and NT at 2.8 per cent.

Shaun Broughton, MD at Shopify for Apac & Japan, described Australian retail as in “good health” despite the month-on-month drop.

“As we head into the busiest time of the year, our research found that shoppers are saving to spend during holiday sales events, with 75 per cent dropping discretionary spend in the last few months, yet 52 per cent are intentionally putting more money aside than ever to take advantage of sales events like Black Friday and Cyber Monday,” he said.