Strong Conversion Lifts May Sales Despite Highest Interest Rates in a Decade
Monthly KRI Summary
Discover key insights in the latest Australian Kepler Retail Market Index for May 2026.
Comparison Period: The following insights are based on comparing the four-week retail month of May this year (27th of April 2026 – 24th of May 2026) to the same period last year (28th of April 2026 – 25th of May 2025).
- Continued global uncertainty, elevated fuel prices and the interest rate hike on 5 May, which lifted rates to their highest level in a decade, would typically be expected to weigh on consumer confidence. However, this has not translated into weaker retail sales during May 2026
- In fact, strong sales growth appears to reflect more deliberate purchasing behaviour rather than a
broad-based spending recovery. Improved sales conversion suggests customers remain willing to buy when they enter stores, while flat ATV and traffic metrics indicate consumers are spending more selectively and exercising greater control over basket size - May also tends to benefit from early promotional activity leading into EOFY sales. With ongoing
cost–of–living pressures, some consumers may have delayed purchases from previous months to take advantage of stronger promotional offers during May
Foot Traffic Trends:
- Passer-by traffic decreased slightly by -0.3% YoY in May, broadly in line with the three-month average (+1.2% YoY). This uplift may reflect reduced driving activity amid higher fuel prices
- In-store traffic also decreased slightly by –0.1% YoY in May, representing a significant improvement on the three-month average decline of –4.3% YoY. While traffic remains slightly below last year’s levels, the result suggests the downward trend is continuing to stabilise
Sales Conversion Performance:
- Sales conversion increased strongly by +2.5% YoY in May, a notable turnaround from the previous month’s decline of -0.4% YoY. This was supported by consecutive weeks of YoY conversion growth, reinforcing that customers remain willing to purchase when they enter stores
Average Transaction Values (ATVs):
- Average transactions values remained relatively flat, increasing by +0.3% YoY. This was slightly below the three-month average growth rate of +1.5% YoY, indicating that shoppers continue to be cautious with basket sizes despite maintaining purchasing intent
Sales Performance:
- Sales increased by +2.6% YoY in May, supported primarily by strong in-store sales conversion. The result suggests that despite higher interest rates and elevated fuel prices, customers remain willing to spend when they enter stores, although they are becoming increasingly selective and less inclined to browse without making a purchase
About Kepler’s Retail Market Index
- Kepler’s Retail Market Index provides the most insightful and most timely view of retail industry performance across both Australia and New Zealand
- The index is based on anonymised data from Kepler’s Retail Foot Traffic Solution customers, primarily non-food specialty retailers
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