Consumer confidence is at a three-year peak, while households' cash flow is improving, and savings are at a record high, all of which support a case for accelerated retail spending through fiscal 2026, Jarden Research said in a Thursday note.

The household spending in Australia rose 5.6% year over year in October, compared with growth of 5.1% in September, driven by a broad-based lift in household goods, clothing, and hospitality.

Spending in November should be better, the report said, with Australia Post reporting an around 5% lift in volumes, and industry discussions suggesting the electronics, furniture, and recreation sectors were standouts.

The improvement in food and alcoholic beverages sales in October is in line with updates from Coles Group (ASX:COL) and Woolworths (ASX:WOW), likely suggesting improving trends. The analysts said Woolworths has a lot of work to do, and they expect Coles's price-to-earnings premium compared with Woolworths' to close if the sales growth gap continues to close.

The investment firm maintained its overweight ratings for Woolworths and Metcash (ASX:MTS), as well as its neutral rating for Coles.