Australian consumers continue to adopt frugal spending habits driven by high levels of uncertainty, behaviours that are unlikely to change in the next six months now the Reserve Bank of Australia's (RBA) has decided to maintain current interest rates by leaving the cash rate at 3.85%, Circana says.

Circana's Managing Director APAC, Paul Hinds, suggests the RBA call yesterday may be "disheartening for Australians." The company's polling data indicates Australian consumers continue to adopt frugal spending habits, driven by high levels of uncertainty. Global tariffs and a shifting geopolitical climate are contributing factors to fragile consumer confidence, according to Circana.

"For retailers, the road ahead is complex with contradictory and opposing realities requiring them to expand and cut simultaneously to meet changing shopper needs," Hinds said.

However, Circana has spotted signs of a turning point over the next six months. "If brands can continue to stretch to meet consumer needs with innovative and high value products we will see industry growth," Hinds said.

Circana suggests industry growth could occur if brands meet consumer needs with innovative and high-value products. The retail landscape is characterised by contradiction, complexity, and cautious optimism, presenting both challenges and opportunities for brands.

The company's data reveals 82% of Australians are 'promo loading', stocking up on products during sales. Additionally, two in five Australians consider the lowest prices as 'extremely important' for their shopping choices, and 81% of shoppers are actively seeking promotions and discounts.

"Shoppers are exercising greater discretion with their spending, prioritising essentials and pulling back on non-essential goods such as alcohol," Alistair Leathwood, Head of Media Analytics and Insights at Circana, stated.

There are further indications of a turning point, with anticipated rate cuts around August expected to support income growth and boost retail performance. Circana noted while transactions are in marginal decline, the number of items per basket has increased, offsetting the decline in visits and softening price growth.

"At the same time, Circana research reveals Aussies are willing to pay a premium for better quality (+15 percentage points compared to the year average) and are interested in trying new products (+17 percentage points)," Leathwood added. "This rare double-digit shift is encouraging. The path forward is about rebuilding price trust and simplifying value for consumers. There is room for growth for brands in the second half of 2025, by delivering the right product, at the right time, at the right price."

Circana found food and beverage categories are experiencing consistent growth, with food items generating eight times the level of absolute growth over two years compared to non-food items. Beverages are showing robust growth across the board. There is an increasing focus on health, with more fresh food being added to shopping baskets and 46% of shoppers seeking no and reduced sugar options.

Category specialists, such as retailers focused on personal care, home care, or pet care, are accelerating the importance of value, attracting customers due to their strong value reputation.

Brands are experiencing significant change already, Circana said, and it's set to continue. "However, there is clear potential for brands to grow, but only by responding with agility, precision, and consumer-centric innovation," the company said.