Australians were dining out and buying more gear in September as retail sales rose 2.3 per cent annually.

Around $36.5 billion was transferred into the country’s coffers during the month.

Sales rose 0.1 percent month-on-month after a very strong August, data from the Australian Bureau of Statistics showed on Thursday.

This figure is lower than the 0.3% rate expected by the market consensus.

“Following a boost last month due to warmer than usual weather, retail spending remained firm in September,” said Robert Ewing, ABS head of business statistics.

Consumers are buying more household items and spending more at cafes, restaurants and takeaways. But spending on department stores and clothing fell during the month.

“The rise in household goods was driven by WA spending on hardware and gardening items after unseasonable rain last month reduced sales,” Mr Ewing said.

ANZ predicted spending would be strong for Black Friday and Boxing Day sales.

“It appears that the combined impact of lower living costs, moderating inflation and tax cuts is resulting in a slight recovery in overall spending,” said a report by the ANZ economist, Madeline Dunk.

“Our ANZ-Roy Morgan measure of Australian consumer confidence continues to trend upward, albeit at a gradual pace.

“This in turn suggests a prolonged recovery in spending growth from here.”

Australians have seen their disposable income increase thanks to the third stage income tax cut this financial year, but data so far has shown most are saving rather than spending.

My Bui, an economist at AMP, said that “obviously people haven’t spent on tax cuts on goods and services.”

She said the volume of spending per person – which adjusts for price changes – had fallen for the ninth consecutive quarter, meaning overall sales figures were essentially only increasing due to the rising prices and population growth.

Retailers have also been under pressure as consumers tighten their belts amid a cost of living crisis and the high interest rates needed to combat that crisis.

The pace of sales growth has slowed significantly since the inflation boom through 2022, when spending was artificially boosted by emergency low interest rates and increasing government largesse.

Thursday’s sales data is unlikely to significantly change the Reserve Bank’s stance on interest rates, as it focuses on tackling inflation and maintaining a strong job market.

But the numbers provide a leading indicator of where the economy could be headed.