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Retail sales increased just 2.1% year-on-year in July with food and cafes, restaurants and takeaway again bolstering overall retail activity.

According to figures released today by the Australian Bureau of Statistics (ABS), shoppers spent more than $35.3 billion across the country in July.

The most significant year-on-year sales increases came from food spending (up 4.9%) and cafes, restaurants, and takeaway (up 9.0%).

All other categories recorded negative sales growth for the second consecutive month, with household goods again recording the biggest decline (down 4.9%), clothing, footwear and accessories (down 0.3%) and Department stores (down 0.05%).

All states and territories recorded growth year-on-year, led by ACT (up 6.1%) followed by South Australia (up 4.1%), Western Australia (up 3.5%), Northern Territory (up 3.5%), Victoria (up 2.4%), New South Wales (up 1.6%), Tasmania (up 0.8%) and Queensland (up 0.7%).

Australian Retailers Association (ARA) CEO Paul Zahra said sales growth overall continued, due to consistent spending on essentials like food albeit, mainly driven by unavoidable price increases.

“Retail sales data is showing a clear delineation between spending on essentials and discretionary goods, with food continuing to record growth mainly due to unavoidable price increases while other categories remained in decline,” Mr Zahra said.

“While spending on takeaway continues to be reasonable – shoppers are likely opting for value options such as quick service restaurants to ease pressure on their budgets.

“Shoppers are becoming increasingly conscious of cutting back on spending, making it a challenging time to be a discretionary retailer.

“Fashion retailers held quite significant sales events this year to clear winter inventory and in a bid to entice bargain-savvy shoppers.”