Retail spending flatlined in October in yet further evidence consumers have banked any recent stimulus windfall instead of hitting the shops.
Consumers spent a seasonally adjusted $27.57 billion in October, according to Australian Bureau of Statistics data released on Thursday, even after the Reserve Bank cut the interest rate to a record low 0.75 per cent at the start of that month.
The latest retail disappointment follows national accounts data on Wednesday that showed weak consumption was weighing on the country's economic growth.
Consensus predictions were for retail spending growth to pick up to 0.3 per cent in October after an underwhelming 0.2 per cent rise in September.
Sales of clothing, footwear and personal accessory retailing fell 0.8 per cent, department stores dropped by the same amount, and the sale of household goods dropped by 0.2 per cent.
This was offset by a 0.4 per cent rise in cafes, restaurants and takeaway food services and a 0.1 per cent gain for food retailing.
The Australian dollar plunged from 68.52 US cents to as low as 68.34 US cents immediately after the release of the data and news Australia's trade surplus dropped by a third in October to $4.502 billion.
Thursday's retail figures follow September quarter GDP data that showed what BIS Oxford Economics chief economist Dr Sarah Hunter called "chronic weakness" in household spending despite three rate cuts and federal government tax offsets.
Dr Hunter said Thursday's retail figures - much like the GDP data - suggested households were becoming more cautious with their spending.
"Instead, they are paying down debt or increasing their savings, thus improving their net financial position," she said.
The RBA opted against cutting the cash rate even lower at its board meeting on Tuesday even though some observers had made a case for a fourth cut this year amid weak consumer spending and stagnant wage growth.
Tuesday's rate decision will allow Christmas and New Year spending activity to filter through before the central bank's board considers the possibility of a cut to 0.5 per cent at its next meeting in February.
The stagnant October retail result was driven by sales declines in the major economies of Victoria, down 0.4 per cent, and NSW, down 0.2 per cent; while retail in SA fell 0.5 per cent for the month.
Sales in Queensland rose 0.4 per cent, Tasmania 1.4 per cent, the NT 2.3 per cent, WA 0.2 per cent, and the ACT 0.3 per cent in seasonally adjusted terms.
Dr Hunter said retailers operating in market segments where competition from online shopping is highest would be feeling the pinch more than most, as they continue to lose market share to e-retailers.
The ABS estimates that online sales accounted for 6.5 per cent of total sales in October, up from 5.9 per cent a year ago.