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The festive season is likely to throw retailers a lifeline before cost of living pressures and ballooning mortgage repayments finally catch up with consumers in the new year.
After the Christmas boost wears off, Deloitte Access Economics analysts expect spending to pull back as is already occurring in other comparable nations, such as the UK and US.
The author of the retail forecasts report, David Rumbens, said Australia could even enter a mild "retail recession", with sales volumes anticipated to fall by 0.2 per cent in the March quarter and 0.4 per cent in the June quarter of 2023.
"The result could see the sector entering a short and shallow 'retail recession'," Mr Rumbens warned.
While many consumers have been content to eat into their savings rate to fund their spending, this is unlikely to continue long term.
"Consumers will only be happy to dip into their savings for so long – some pullback in spending will need to come," the report stated.
But despite a few cracks emerging in retail spending data in recent months, Mr Rumbens said the holiday spending was likely to keep retailers busy for the rest of 2022.
Growth in nominal retail sales in the 12 months to December is expected to grow by 10.4 per cent, the economists estimated.
"But most of this is expected to be driven by prices, as retailers try to maintain their margins by passing on rising costs."
Retail prices are tipped to swell by 7.6 per cent in the year to December.
Spending behaviour remains a source of interest for the Reserve Bank as it navigates its narrow path of hiking interest rates to tame inflation without overdoing it and triggering a recession.
The RBA board will meet next Tuesday to make its final cash rate decision for 2022.
