Australian retailers are heading into a tougher trading period as the boost from temporary fuel excise relief and heavy discounting fades, Deloitte Access Economics has warned.
The firm’s latest Retail Forecasts report predicts real retail turnover growth will slow from 2.8 per cent in the 2025-26 financial year to 1.5 per cent in the current year, with discretionary spending expected to bear the brunt of the downturn.
Deloitte said household budgets had been supported by cheaper fuel and end-of-financial-year promotions, but those benefits were now beginning to unwind. The Australian Government’s temporary fuel excise discount ended on August 3 after being tapered during July.
David Rumbens, a Deloitte Access Economics partner and the report’s principal author, said the economic impact of the first half of 2026 was now feeding through to households.
“Domestic price pressures and higher energy costs due to the conflict in the Middle East mean inflation is still running too hot,” he said.
Discretionary spending growth is forecast to fall from 1.9 per cent to 0.7 per cent. Household goods, which recorded growth of 5.8 per cent over the past year, are expected to decline by 0.2 per cent as consumers postpone purchases of furniture, appliances and electronics.
The forecast reflects a combination of higher interest rates, weaker real wages, rising unemployment and softer property prices. Deloitte said three consecutive interest rate rises in the first half of the year had added to pressure on mortgage holders, while inflation had continued to erode spending power.
Mr Rumbens said household spending was likely to moderate further as mid-year discounts disappeared and consumers responded to the deteriorating cost-of-living outlook.
“Households are beginning to redirect some of their constrained discretionary spending from larger items towards smaller luxuries and experiences,” he said, warning that categories linked to the housing market were likely to face the greatest pressure.
Food retailing is expected to remain comparatively resilient as households prioritise essentials, although Deloitte said even non-discretionary spending could weaken later if consumers continued looking for ways to reduce costs.
