Australian retailers are facing their worst Christmas shopping season since the global financial crisis more than a decade ago as fires burn across the country.

Key points: The Australian Retailers Association expects Christmas sales to fall short of targets

The Australian Retailers Association expects Christmas sales to fall short of targets Chief executive Russell Zimmerman says the smoke haze is keeping shoppers at home

Chief executive Russell Zimmerman says the smoke haze is keeping shoppers at home Economists say tax cuts and low interest rates have failed to boost consumer spending

The bushfire crisis has come on top of already weak consumer spending as people save rather than spend their tax and interest rate cuts.

Russell Zimmerman, head of the Australian Retailers Association, said he expected to see the weakest Christmas spending in 11 years.

"Talking to retailers, it's been a much softer lead-in to Christmas than we've seen in the past," he said.

"We know when there's a lot of smoke haze around, consumers tend to bunker down and stay at home and they're not out spending money.

"But I think it's also fair to say that retail sales were affected by the Black Friday and Cyber Mondays sales that happened earlier in the month."

The retailers association is hoping the boost will come during the Boxing Day sales. ( ABC News )

The association predicted Christmas sales of $52.7 billion but Mr Zimmerman said it was going to be hard to meet that forecast.

"I don't know that we'll make the $52 billion. Last year's was about $51.4 billion," he said.

"I think we'll achieve last year's but I don't think we'll achieve the 2.6 per cent growth or if we do, only just."

Mr Zimmerman is still hopeful of a small rise in post-Christmas sales from last year's $18.3 billion to $18.7 billion over Boxing Day to the middle of January.

"A lot of it will depend upon what the weather is like and how much the smoke and fire inhibit it," he said.

The Commonwealth Bank's Household Spending Intentions survey found that spending on experiences had trended higher but spending on goods tracked sideways.

The bushfires have been blamed for dampening consumer confidence. ( ABC Illawarra: Sarah Moss )

Michael Blythe, CBA's chief economist, said tax cuts and record-low interest rates have failed to boost consumers' appetite.

"They've been given plenty of opportunities," he said.

"We've had a serious of rate cuts, lower mortgage payments, tax rebates flowing through and of course, rising house prices and a pretty solid labour market."

But he said the bushfires have worsened consumer confidence.

"So, we've seen a pretty steady deterioration in consumer sentiment since the middle part of the year but things like bushfires and smoke haze in Sydney are not going to help that," Mr Blythe said.

And a major industry group has called on the Federal Government to consider abandoning its plans for a budget surplus to divert funds to rebuild devastated communities.

The Australian Industry Group said fires and drought will increase food prices and insurance premiums and further dampen consumer spending.

Chief executive Innes Willox told AM the bushfire emergency has hurt economic growth and more stimulus will be needed.

The Australian Industry Group says the bushfires have hurt economic growth. ( ABC News: Giulio Saggin, file photo )

"Well, it may be in the end there isn't much choice here. We need to rebuild communities, so there is going to need to be some sort of significant government response to these activities," he said.

Mr Willox said governments across the country need to develop holistic and coordinated strategies to confront the threat of increasingly severe bushfire seasons.

"We're running pretty close to the edge. And it's not just going to be the immediate short-term. It's going to be the longer-term too," he said.

"And even if it rained tomorrow, put out bushfires and ended the drought, it would take three or four years to recover in some centres."

The Insurance Council of Australia says since the start of the bushfire season in September, more than $238 million in claims for losses have been lodged by households and business owners in New South Wales, Queensland and South Australia.

But those figures are set to rise, with more catastrophic blazes expected.