Struggling retailers have enjoyed only a modest rebound in sales on the back of tax refunds and successive interest rate cuts earlier this year.

Key points: While retail sales rose in most sectors and across most states, the increase was still only modest

While retail sales rose in most sectors and across most states, the increase was still only modest Food retailers enjoyed the biggest jump in sales, while restaurants and cafes dropped

Food retailers enjoyed the biggest jump in sales, while restaurants and cafes dropped ACT and Queensland shoppers pulled out their wallets, while WA and Northern Territories saw their sales fall again

In seasonally adjusted terms, retail sales rose 0.4 per cent in August.

This was in line with expectations, given the weakness of the previous months' data.

It was also the first significant reading including the impact of the July tax cuts and falling borrowing costs driven by the RBA in June and July.

"Food retailing [+0.4 per cent] led the rises," the Australian Bureau of Statistics' Ben James said.

The rises were widespread across the sector with clothing, footwear and personal accessory retailing (+1.8 per cent), department stores (+1.1 per cent), household goods retailing (+0.3 per cent) showing solid growth.

"The rises were partly offset by a fall in cafes, restaurants and takeaway services (-0.3 per cent)," Mr James said.

Despite the improvement, NAB's economics team noted there was no sign of a "big tax-refund bump".

"While a welcome return to growth, so far retail sales have failed to show a material boost from the tax refunds that began flowing in July, suggesting consumer spending faces considerable headwinds," NAB's Kaixin Owyong said.

"For the RBA, these data confirm anecdotes from retailers that suggested ongoing softness and suggests further stimulus is required to get consumer spending to lift."

While sales fell in Western Australia and the Northern Territory, consumers in most other states were prepared to open their wallets with the ACT (+1.9 per cent) and Queensland (+0.8pc) enjoying the biggest bounce in spending.

Small shops hardest hit

A breakdown of channels shows while online sales are growing at a solid 10-15 per cent pace, it is well below the peak 30 per cent growth through 2017 and 2018.

"Sales via traditional bricks and mortar stores has been slower but steadier, holding around 2 per cent a year throughout," Westpac's Matthew Hassan said.

Mr Hassan said small retailers continue to feel the brunt of the slowdown over the last year with sales at a 2.5 per cent annual pace, compared to 4.5 per cent growth in larger stores.

"Overall this is a disappointing result suggesting that the stimulus cash has not been deployed and, or underlying conditions may be weaker than estimated — that is, the stimulus effects may have prevented an outright sales decline," he said.

"Either way it marks a softer than expected trajectory for the consumer so far in the third quarter."