Analysts at Jefferies have expressed an increasingly cautious stance on consumer discretionary retail companies in Australia based on rising valuations.

The brokerage highlights that the market is eyeing a potential monetary pivot.

It predicts that Super Retail Group (ASX:SUL) will face a significant increase in wage costs in FY25, as a result of the proposed enterprise agreement for 2024.

Anticipated costs for Coles Group (ASX:COL) are also seen to rise as a consequence of the implementation and ramp up of the Witron & Ocado project, although this would be partially offset by a tailwind due to reduced stock loss.

Jefferies believes that there is a risk of aggressive pricing due to heightened scrutiny of pricing and competition.

All consumer stocks under their review met or exceeded consensus NPAT expectations, the only exceptions being Flight Centre Travel Group (ASX:FLT) and Woolworths (ASX:WOW).

According to Jefferies, inflation tailwind is moderating for food retailers whilst sales from discretionary retailers demonstrate increased resilience.

Super Retail Group is a specialty retailer of automotive, tools, leisure and sports products.