Despite inflationary pressures and rising living costs, retail spending increased 1.7 per cent in December, according to the Mastercard SpendingPulse report, released by the Australian Retailers Association.

Consumers spending on apparel rose by 6.7 per cent, on groceries by 6.6 per cent, lodging 4.1 per cent, electronics 3.5 per cent, jewellery 2 per cent, and at restaurants by 1.8 per cent last month.

Year-on-year sales were down for fuel and convenience at 4.1 per cent and home furnishings at 2.4 per cent.

ARA CEO Paul Zahra welcomed the figures and said achieving spending growth in December was “encouraging” for retailers.

“These December results are a testament to the resilience of the retail industry and set a good foundation as we anticipate a period of uncertainty this year with inflationary pressures and the rising cost of living,” he said.

Although Zahra flagged inflation as a factor in the increased sales, he forecast a “challenging environment” for businesses as rising operating costs will tighten margins moving forward.

• Further reading: Black Friday sales boosted retail spending in November