2026 consumption to grow 4% in China, 2% in Australia: S&P Global

Australia's strong consumer trend remains robust, but growth could moderate amid persistent inflation. China is relatively stable.

Weak consumer sentiment in Japan is not improving as households face high food inflation and subdued wage growth, on top of a declining population. Nevertheless, the ratings trend is stable, as rated issuers expand overseas to compensate for domestic weakness. Issuers have passed on some cost to consumers, and able to further optimise cost structures.

Consumer sentiment in Australia may ease. Re-emerging inflationary pressures and the path of interest rates could moderately dampen demand this year, S&P Global Ratings said.

However, the overall trend in Australia will likely remain mildly positive as consumers entered the new year on a positive note supported by a strong labour market, improvements in disposable income, a rebounding property market and steady population growth.

Rather than trading down, consumers in China are selective in spending on goods and have a stronger focus on the quality-price ratio. Domestic brands gain market share due to their improved quality and the ability of Chinese producers to quickly adjust to evolving consumer preferences.

An ability to add emotional satisfaction to Chinese consumers could differentiate revenue growth trends among issuers.

A key rating risk for Japan is stronger pressure to earnings amid intensifying competition in the home market and active investments.

Inflationary risks may hamper consumption in Australia, while promotional intensity may pressure retailer margins.

A major pullback in consumption is projected in China as the effect of trade-in programmes diminish.

S&P Global Ratings projected consumption to grow by 4 per cent this year in China and by 2 per cent in Australia.

With Japan’s economic growth likely falling below 1 per cent in 2026, retailers in the country are likely to pursue scale and improved operating efficiency through consolidations, the rating agency added.

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