Australian retail spending remained resilient in May, with consumers continuing to spend despite weak confidence, cost-of-living pressures and renewed concern over interest rates.

New Australian Bureau of Statistics data shows retail spending rose 5.8% over the year to May, reaching $39.67 billion, with growth recorded across every retail category.

The figures point to a stronger-than-expected result for retailers, including consumer electronics, appliance and technology sellers, although inflation continues to distort the headline growth number.

Australian Retail Council Chief Economist Glenn Fahey said the sector was holding up, but warned real sales growth remained far more modest once inflation was taken into account.

“May was a solid result and shows the retail sector is proving resilient, with consumers continuing to spend despite subdued confidence and ongoing cost-of-living pressures,” Fahey said.

Spending rose across all states and territories, led by the Northern Territory, up 8.1%, and Western Australia, up 7.3%. New South Wales rose 5.3%, while Victoria increased 5.1%.

By category, cafes, restaurants and takeaway food services rose 7.2% to $5.9 billion, while household goods retailing increased 6.4% to $6.6 billion. Clothing, footwear and personal accessories rose 6.9% to $3.1 billion.

The stronger retail result comes after ABS jobs data showed employment rebounded by 40,300 in May, with unemployment easing to 4.4%, potentially supporting household confidence heading into the new financial year.

However, retailers still face a mixed outlook. Rising trimmed mean inflation has kept pressure on the Reserve Bank ahead of its August rates decision, raising the risk that consumers remain cautious on big-ticket tech, appliances and discretionary electronics.

Fahey said sales growth would not automatically translate into stronger profits, with retailers still facing higher wages, freight, energy, leasing and supply chain costs.

He also warned June’s end-of-financial-year sales period was expected to be subdued as value-conscious consumers continued to manage household budgets carefully.