While supply side drivers have cooled it will still take some time for year-to price growth to come down to normal levels, though this is expected by late 2023. But a slowdown in price growth will be little help against another turning point for retailers, when consumers shift further towards services spending over H2 2022 and H1 2023. Overall, consumer spending growth is expected to outpace retail growth over the year to the December quarter.

For now though, Australia is operating at close to full employment and retailers are concerned about having enough labour in such a tight labour market. Retail job vacancies have more than doubled since May 2019 with no sign of slowing down. These positions aren’t being filled and employment in the retail industry is lower – down 1.2% - than in May last year.

Importantly, the industry is missing a key component of its workforce, being migrants, and especially international students. Even with this a key focus of the federal government’s Jobs and Skills Summit last week, it’s unclear if, and when, international students will return to their pre-pandemic levels.

The higher share of casual and part-time workers in the retail workforce is likely also weighing on the industry’s ability to retain workers. With fewer entitlements binding these workers to retail jobs and high transferability of skills between retail jobs, workers are more likely to shift between employment.

While the labour market is expected to remain tight, retailers will have to attract new talent and retain and excite the talent they already have.