The wave of Australians panic buying groceries over the last week has driven supermarket sales high enough to tip the entire retail sector into positive growth in March despite the economic impact of the COVID-19 pandemic.
Modelling of retail spending for the week ending March 16, released by ANZ economists Adelaide Timbrell and David Plank, shows supermarket spending soared 40% year-on-year in the wake of strict social distancing measures coming into effect.
The unprecedented social restrictions, coupled with ongoing uncertainty about the fast-spreading coronavirus outbreak, saw supermarket shelves across the country emptied earlier this month, leading to perceived shortages of essentials like toilet paper.
Prime Minister Scott Morrison and other officials condemned the panic buying, and supermarket giants Coles and Woolworths introduced product purchasing limits, but that didn’t stop widespread hoarding from taking place.
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Sharp rises were recorded in the pharmacy and toiletry category, up 60% year on-year last week, while other food sales increased 35% compared to the same time last year.
“ANZ data shows grocery stockpiling in March could have a stronger effect than distancing measures, culminating in retail sales growth for the month,” the economists said on Tuesday.
I know there’s no shortage of photo evidence but when will we start seeing changes? My sister just went shopping for a family of five. Woolworths Stafford in Brisbane. Midday Thursday pic.twitter.com/cS32SiTzAC
— Lisa Millar (@LisaMillar) March 19, 2020
However, just days after tougher social restrictions came into force, the figures are beginning to show the economic implications of putting the Australian economy on ice.
Dining-out and takeaway spending declined 8% year-on-year for the week ending March 16, and with restaurants and cafes now restricted to pick-up and home delivery services, this spending is expected to worsen.
Meanwhile, non-food spending also plunged overall, despite a 22% increase in electronics sales compared to last year.
“We expect that this was concentrated in appliances (for extra food storage) and electronics for those transitioning to working from home. We don’t expect this growth to last,” the economists said.
The economists said an increase in online shopping by isolated Australians who may be substituting their spending will soften the blow to the retail sector, but this won’t offset broader weakness.
“We expect household consumption to decline sharply now that tighter social distancing regulation is in place. The moves to close non-essential services could severely reduce household spending,” they said.