Despite discretionary spending continuing to soften, retail spending rose 4.2 per cent year-on-year in May, according to data from the Australian Bureau of Statistics (ABS).

Shoppers spent $35.5 million in stores and online with significant spending observed in food, up 6.1 per cent and cafes, restaurants, and takeaway services at 12.7 per cent.

Clothing, footwear, and accessories sales were up 4 per cent followed by department store sales at 3.4 per cent while household goods fell by 4.4 per cent, marking six months of ongoing spending decline in the category.

Due to “cooler than average weather” and early promotional activity, “modest growth” was observed in other retailing at 2.2 per cent, the ABS said.

Australian Retailers Association CEO, Paul Zahra, said sales growth for essentials like food is “largely attributable to inflationary price increases”.

Data released this week showed Australia’s inflation rate eased in May to 5.6 per cent.

“Food, dining out and takeaway are still predominantly driving overall retail sales growth and unavoidable price increases are a significant factor for those businesses.”

Zahra flagged that cost-of-living and cost-of-doing-business pressures remain the “greatest concern” for retailers as typically they tend to have a “lag effect”.

“While we’re seeing a softening in spending, retailers are simultaneously feeling the pressure from increasing operating costs across the board,” said Zahra.

Ben Dorber, ABS head of retail statistics, said retail turnover was “supported by a rise in spending on food and eating out”.

“This latest rise reflected some resilience in spending with consumers taking advantage of larger than usual promotional activity and sales events for May.”

By state, ACT led with the highest growth in retail turnover at 9 per cent followed by SA at 6.5 per cent, WA at 5.7 per cent, NT at 5.2 per cent, Victoria at 4.7per cent, NSW at 4.2 per cent, Queensland at 1.8 per cent and Tasmania at 1.6 per cent.

National Retail Association CEO, Greg Griffith, said promotional sales on Mother’s Day contributed to healthy spending and improved consumer confidence.

“While consumers tightened their purse strings in previous months, they seem ready to spend when the occasion arises or when sales promotions are readily available.’’

• Further reading: Australian retail spending ‘plateaued’ in April