PRICE WARS DRIVE RETAIL SPENDING

AUSTRALIANS are taking advantage of sales and price wars by spending big on groceries, household goods and clothing.

National retail spending increased 3.6 per cent year-on-year in April while food retailing lifted 2.4 per cent, according to the Australian Bureau of Statistics.

The Australian Retailers Association (ARA) says the figures demonstrate increasing competition between the major supermarkets and Aldi, causing deflation in the sector.

"With supermarkets accounting for nearly 50 per cent of all retail sales, the soft increase of only 2.16 per cent year-on-year in supermarkets contributed to the low growth of the retail sector of 3.6 per cent," ARA executive director Russell Zimmerman says.

The household goods category represents the highest growth figures at 5.8 per cent year-on-year, reflecting strength of the housing market and the resulting effect on consumer confidence.

Clothing and footwear has maintained a growth of 4.76 per cent year-on-year due to heavy discounting, meaning volumes are up at the expense of margins. New players entering the market has also had a significant effect on growth.

"The figures reported today by the ABS also highlight a number of trends in regards to state specific retail trade," Zimmerman says.

The large service sector based states are growing strongly, with Victoria recording 4.3 per cent and New South Wales at 4.95 per cent. Traditional mining states are experiencing low growth as they go through a period of structural adjustment, with Queensland at 1.2 per cent and 2.04 per cent Western Australia.

Tasmania has shown strong growth of 5.85 per cent year-on-year off the back of strong economic and tourism conditions.