The eroding effect of lockdown is likely to hit retail sales, according to research by NAB which predicts cashless retail sales to fall 1.1 per cent in June compared to a month prior.

The drop, which NAB predicts will be the outcome of the ABS’ retail trade release due 21 July, comes as a slow feeling of a return to pre-pandemic “normal” life has been shattered by the spate of Covid-19 outbreaks around the country, with another 65 cases confirmed overnight after NSW Premier Gladys Berejiklian confirmed a two-week extension to the state’s lockdown.

“These lockdowns look to have dented retail spending in areas hard-hit in 2020, notably hospitality and clothing and footwear,” said NAB chief economist Alan Oster.

“While the Australian economy continues to perform well, consumer spending is increasingly taking a back seat as a driver of growth – that said, confidence remains around twice its long run average.”

Consumer sentiment has managed to stay relatively flat across the country, though this is due to steep declines in certain states and sharp spikes in others.

Consumers in NSW, unsurprisingly, have lost confidence (10.2 per cent down) due to the recent spike in cases and the resultant lockdown according to the Westpac-Melbourne Institute’s index of consumer sentiment. Victorians and Western Australians, however, saw confidence grow 10.5 per cent and 15 per cent respectively as they exited lockdowns.

According to Westpac chief economist Bill Evans most Sydney-based survey respondents were, at the time of the survey, expecting the city’s lockdown to be shorter than it is turning out to be.

“Ominously, that suggests confidence and Sydney and NSW could fall significantly further if lockdown measures are unsuccessful or slow to act in containing the outbreak,” Evans warned.