Rising interest rates and inflation have led to speculation of a spending slowdown for non-discretionary goods, but JB Hi-Fi said on Tuesday that sales momentum had been strong throughout the year.

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The COVID-19 pandemic helped fuel sales of consumer electronics hardware like game consoles and computers, which often have lower margins than other tech like computer software or games.

However, as Barrenjoey analysts point out in a recent note, supply shortages of many electronic products have helped with margins.

“JB Hi-Fi’s gross margins ought to have reduced but given less discounting as product was in short supply, gross margins have actually expanded significantly,” consumer analyst Tom Kierath said in a note last month.

The rising costs of food and non-discretionary products like petrol have led analysts to predict that Australians will have less room in household budgets for spending on things like entertainment and video games.

However, JB Hi-Fi’s growing sales volumes suggest that consumers have not changed their behaviour yet.

Jarden analysts see more risk in companies like JB Hi-Fi and Harvey Norman when compared with the future prospects of the major supermarkets. However, they acknowledge it’s difficult to predict the consumer spending outlook given that many Australian households are still sitting on piles of cash despite the economic challenges.

“The Australian consumer is facing headwinds but has more than $300 billion in savings - retailer’s ability to engage and drive spend [is key],” analyst Ben Gilbert said in a note to clients this month.

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