Australian retail spending has fallen for the second month in a row, as spending cuts in the federal budget dampen consumer confidence.
Retail trade was down 0.5 per cent in May, following a 0.1 per cent fall in April, the Australian Bureau of Statistics said on Thursday.
CommSec economist Savanth Sebastian said fears over May's federal budget, as well as unseasonably warm weather, were to blame.
"There's been a trend of a slowing growth story when it comes to retail activity over the last four or five months and you can really sum it up in a couple of words: federal budget and consumer confidence," Mr Sebastian said.
"Those are the two big drivers of the weakness.
"The warmer weather is having an impact on clothing sales.
"Non-food retailing was down almost one per cent which suggests the consumer has really crept back into its shell."
Mr Sebastian said a big turnaround in consumer confidence is needed for retail spending to recover.
"I think confidence will bounce back, but certainly not in the next few months. It's going to take some time yet," he said.
"The higher Australian dollar will also start to see some money coming out of stores and going online."
JP Morgan economist Ben Jarman said retail spending has lost momentum over the past few months after strong gains over the Christmas period.
"The strength at the turn of the year wasn't really sustainable," he said.
"Partly this is just a temporary effect from the federal budget, which should wane over the next few months, but we still think the underlying story for retail is not that compelling because of weak household income growth."
Mr Jarman said continuing weakness in retail spending growth will mean that there is a risk that economic growth for the remainder of 2014 won't be as strong as it was in the first three months of the year.
