Retail spending grew 1.2 per cent in the March quarter after overcoming the impact of the COVID-19 Omicron variant at the start of the year.
It followed a 7.9 per cent jump in spending during the December quarter as coronavirus restrictions eased after the earlier Delta variant lockdowns, the Australian Bureau of Statistics said.
Retail sales volumes were at a record high of $93.2 billion for the March quarter to be 4.9 per cent higher than a year earlier.
"Most discretionary spending industries experienced rises in volumes, despite price increases," ABS director of quarter economy-wide statistics Ben James said.
"However, food retailing fell 1.5 per cent with strong price increases for fresh food and grocery items combining with more consumers choosing to dine at hospitality venues."
Meanwhile, consumer confidence - a pointer to future household spending - edged lower in the past week in response to the Reserve Bank of Australia raising the cash rate for the first time in more than a decade.
The weekly ANZ-Roy Morgan consumer confidence index declined a further 0.2 per cent to a 20-month low of 90.5, remaining well below the monthly average of 112.4 stretching back to 1990.
This was the fourth consecutive decline and followed a six per cent tumble a week earlier, which was in a response to a spike in inflation to its highest level in over 20 years.
"This suggests that consumers had anticipated the likely increase in interest rates by the RBA," ANZ head of Australian economics David Plank said of the latest result.
However, confidence among people who are paying off their home loan tumbled by five per cent, reinforcing the 9.6 per cent drop in the previous week.
This was partially offset by the increase in confidence for those who already own their home or are renting, rising by 1.3 per cent and 2.6 per cent respectively.
Separately, the CommBank household spending intentions index fell by 3.8 per cent in April after reaching a record high in March.
The survey - which analyses CBA payments data, loan applications and publicly available search activity on Google Trends - found home buying, health and fitness, and transport spending led the falls in April, but were partially offset by gains in travel, entertainment and retail sectors.
"We are seeing a post-COVID normalisation of consumer spending patterns," Commonwealth Bank senior economist Belinda Allen said.
The National Australia Bank business survey showed little let-up in cost pressures during April, but trading conditions and profitability among firms show the economy is faring quite well so far in the face of higher inflation.
NAB's business condition index rose five points to 20 points, building on gains recorded in March, but confidence eased six points to 10 index points although remained above its long-run average after several months of steady increases.
"Business confidence remains relatively high across industries and in most states, with only Tasmania showing noticeably weaker levels," NAB chief economist Alan Oster said.
"The strong business conditions, including trading conditions and profitability, show that the economy is faring quite well and so far, demand is holding up in the face of higher inflation."
