This rise of 1.3% in July lies at odds with many economist forecasts, with ANZ anticipating retail sales to rise 0.3% in July while Westpac had forecast a 0.1% dip.
Ben Dorber, head of retail statistics at the ABS, said after slowing growth in recent months, the 1.3% rise in July was the largest since the 1.6% rise in March 2022.
"Turnover rose in five of the six retail industries in July 2022. This shows that, despite cost-of-living pressures, households are continuing to spend," Mr Dorber said.
ABS data revealed department stores had the largest rise, up 3.8%, followed by clothing, footwear, and personal accessory retailing up 3.3%.
Cafes, restaurants, and takeaway food services were also up 1.8% in July, with food retailing increasing a further 1.2%.
Across the states, Tasmania marked the sole decline in retail turnover, falling 0.3% in July.
Victoria, the Australian Capital Territory and Western Australia marked the largest increases in retail turnover, rising 1.8%, 1.8% and 1.6% respectively.
Strong spending pushes case for another 0.50% rate hike in September
Presenting indicators based on the number of Westpac credit and debit card transactions processed daily, Westpac Card Tracker Index data for the first three weeks of August revealed a lift of 1.3% to 109.2.
Westpac Senior Economist Matthew Hassan said the index continues to hold up well despite recent rises in official interest rates and slumping consumer sentiment.
"Annual growth in card activity is tracking at a robust pace, over 9.0% above its pre-COVID rate," Mr Hassan said.
"We now have 15 weeks of card data since the first 25 basis point hike on May 3. The average index read has been 108.5, down only very slightly on the 108.7 average over the 15 weeks prior to the move."
"Policy moves are hitting sentiment hard, but so far look to have little or no impact on actual spending."
As a result, economists have joined Westpac and ANZ in locking in expectations of another 0.50% cash rate increase for September, when the RBA meets next week.
Aust July retail sales far >exp: +1.3%m/16.5%y.— Shane Oliver (@ShaneOliverAMP) August 29, 2022
Boosted by higher prices, but despite cost of living pressures consumers are still growing their spending for now. Another +0.5% RBA hike is likely next wk.
The slump in confidence still points to slower spending ahead
(ABS charts) pic.twitter.com/FHlA2dm0D4
Image by Tim Carey via Unsplash