Australian retail sales were up only 1.5 per cent year over year to $35.4 billion in August, according to data from the Australian Bureau of Statistics.

The growth was largely driven by sales from the cafes, restaurants, and takeaway industry, which rose 8 per cent, followed by food with a 3.5 per cent increase.

Clothing, footwear and accessories rebounded from a decline in July, up 1.4 per cent in August.

Household goods recorded the biggest decline (down 6.6 per cent), while department stores dropped slightly by 0.6 per cent. Other retailing remained flat with only 0.1 per cent growth.

Most states and territories recorded growth, namely ACT (5.5 per cent), WA (4.0 per cent), NT (2.8 per cent), SA (2.6 per cent), and Victoria (1.9 per cent).

NSW and Queensland were flat, up 0.6 and 0.3 per cent respectively, while Tasmania saw a 1 per cent decrease.

Australian Retailers Association (ARA) CEO Paul Zahra said consistent spending on essentials made retail’s performance in August look more favourable than reality.

“As food sales continue to grow off the back of unavoidable price increases, most other categories are suffering consistent spending declines,” Zahra said.

Retailers, who are also struggling with rising operating costs, will concentrate on offering the best value for budget-driven shoppers as they lead into the Christmas trading period, he added.

National Retail Association deputy CEO Lindsay Carroll said a slowdown in consumer spending before retail season was expected.

“Consumers have experienced a few months of relief with the Reserve Bank’s rates pause but will continue to hold on to every Aussie dollar until the sales hit, in case the honeymoon period ends,” Carroll commented.