The latest ABS retail trade figures show that sales in February fell 1.4 per cent, seasonally adjusted, compared with a rise of 1.1 per cent the previous month.
The Australian Retailers Association (ARA) said the figures were further evidence retailers are still on the rocky road to recovery from the economic downturn.
"Retailers have copped a double whammy on sales last month,” said ARA executive director Russell Zimmerman.
“February is always a hard time for families dealing with back to school costs as well as credit card bills from Christmas causing a financial ‘hangover’ for many consumers.
"But this year there was the added pressure of interest rate rises before Christmas as consumers tightened the belts on their discretionary spend to cope with increases in mortgage repayments," Zimmerman said.
Sales fell, in seasonally adjusted terms, 3.9 per cent for department stores as well as clothing, footwear and other personal accessory retailing. Sales were also down for food retailing (-1.7 per cent), household goods retailing (-1.3 per cent) and other retailing (-0.8 per cent).
"Only cafes, restaurants and takeaway food services experienced any growth in sales (1.8 per cent), reflecting consumers’ willingness to indulge in small discretionary spend, like going out for lunch. However, it's clear shoppers still view larger purchases, new outfits and furniture, as a luxury they can't afford," said Zimmerman.
NSW (-2.5 per cent) recorded the biggest decline in sales in February, followed by South Australia (-1.7 per cent), Western Australia (-1.4 per cent), Victoria (-0.9 per cent), the Australian Capital Territory (-0.9 per cent) and Queensland (-0.8 per cent). Sales in Tasmania (1.5 per cent) and the Northern Territory (0.8 per cent) rose in February 2010.
"After falls in December retail sales and slow growth in January, the decline in February retail sales is a clear sign to the Reserve Bank to be mindful of another interest rate rise when they meet next Tuesday. Consumers need time to properly manage increases to their mortgages before they are hit with further interest rate rises,” he said.