Retail sales in May fell flat, but franchise takeaway orders boomed according to the latest data from the Australia Bureau of Statistics (ABS).

The latest retail sales data showed a rise of 0.1 per cent in May, seasonally adjusted, which was slightly below the consensus forecast of 0.2 per cent.

This follows a fall of 0.1 per cent in April and a rise of 0.3 per cent in March.

Annual growth slowed to 2.4 per cent in May, the slowest pace since the start of 2018, according to Westpac, and well below the long-run average of 4 per cent over the year.

Despite retail sales in May failing to live up to expectation, takeaway food, the smallest online retail category, saw the biggest gain in the month of 9 per cent.

Westpac analyst Matthew Hassan described the May retail update as “bleak but not bleaker than expected”.

“Retail sales are treading water in nominal terms rather than contracting,” Hassan said.

“As such the wash up for the June quarter volumes that feed into national accounts estimates of consumer spending will depend heavily on what has been happening on the price side.”

Reason for slow in retail sales in May

Hassan noted that moves in food prices negatively impacted the food sales, which was the main source of weakness for retail sales in May.

The category, which accounts for 40 per cent of retail spending, fell 0.3 per cent in May, seasonally adjusted. Excluding food retailing, sales would have risen 0.4 per cent in the month.

“We suspect retail price inflation has slowed significantly from the food price driven gains over the last two quarters. The June quarter CPI update due at the end of the month will be an important pointer on this question and the extent to which growth in consumer demand is slowing,” Hassan said.

Retail industry results

Other retail industries showed mixed results in May, with rises in cafes, restaurant and takeaway food services (0.7 per cent), household goods retailing (0.5 per cent) and other retailing (0.6 per cent). These rises were offset by falls in department stores (-0.4 per cent), clothing, footwear and personal accessory retailing (-0.2 per cent) and food retailing (-0.3 per cent).

By state and territory, gains were seen in Victoria (0.6 per cent), South Australia (0.5 per cent), the Australian Capital Territory (0.7 per cent) and the Northern Territory (0.5 per cent). Sales declined in Queensland (-0.3 per cent), New South Wales (-0.1 per cent), Western Australia (-0.2 per cent) and Tasmania (-0.4 per cent) in seasonally adjusted terms.

On Wednesday, NAB released its monthly Online Retail Sales Index, showing a 3.6 per cent gain in the month, following a weak result in April, when online sales contracted by 3.3 per cent.