Retail spending lifts 0.2pct as living costs bite

Retail spending has stayed flat over the month as rising interest rates and sky-high living costs weigh on shopping habits.

Official retail sales rose a modest 0.2 per cent in February, down from a 1.8 per cent lift in January.

The result was broadly in line with expectations of a flat result after a period of seasonally-driven volatility over November, December and January,

Despite the fluctuations over the past three months, Australian Bureau of Statistics head of retail statistics Ben Dorber said retail spending, on average, had been flat through the end of 2022 and into the beginning of the new year.

"Non-food industry results were mixed as consumers continue to pull back on discretionary spending in response to high cost of living pressures," Mr Dorber said.

Department store spending lifted one per cent in February and clothing, footwear and personal accessory retailing improved 0.6 per cent.

The other retailing component fell 0.4 per cent, and household goods retailing was unchanged in the month.

Spending in food-related industries rose in February, with cafes, restaurants and takeaway food services up 0.5 per cent and food retailing improving by 0.2 per cent.

The cost of living crunch and higher interest rates have also been weighing on consumer sentiment.

The ANZ-Roy Morgan weekly measure of consumer confidence lifted by a modest 0.1 points after four weeks of consecutive declines.

Despite the minor improvement, the headline figure at 76.6 points was still below 80 for the fourth week in a row and well below long-run averages.

ANZ senior economist Adelaide Timbrell said confidence among those paying off a mortgage jumped 2.9 points, partially unwinding the 4.3 points fall the week before.

"Confidence among renters and outright homeowners declined 0.5 points and 1.8 points respectively after increases last week," she said.

"The index, in six of the past seven weeks, was among the 12 worst results since the COVID outbreak."

The confidence subindices were mixed - the 'time to buy a major household item' gauge lifted 2.9 points and the 'current' and 'future' financial conditions recorded modest gains.

Both 'current' and 'future' economic indicators declined.

Conditions for small businesses are also looking less favourable.