Economists say big structural changes in the economy have been hitting consumers hard, particularly when it comes to wages, and that this has shown up in the latest retail sales data. But they cautioned against pessimism, saying they expect retail sales to pick up later in the year as jobs pick up and wages begin to improve in early 2015. "The most difficult thing for consumers at the moment is that wages are still fairly subdued," Kieran Davies, Barclay's chief economist, said on Wednesday. "But companies are hiring again, and consumers have been enjoying a wealth affect from stronger house prices so I still think the outlook for the retail industry will be positive for the rest of the year," Mr Davies said.

Bureau of Statistics data shows the largest contributor to retail sales growth last month came from "other retailing" (1.6 per cent), followed by food retailing (0.3 per cent), cafes, restaurants and takeaway food services (0.2 per cent) and clothing, footwear and personal accessory retailing (0.3 per cent). The industries that fell were department stores (-2.9 per cent) and household goods retailing (-0.8 per cent). The weak figure surprised the market, which had been expecting growth of 0.4 per cent, rather than 0.1 per cent. Annual spending growth fell from 5.8 per cent to 5.1 per cent. "The recovery in spending that has occurred since the middle of 2013 has been very uneven, and it appears that consumers are hesitant to lift spending significantly further," Janu Chan, St George senior economist said.

"Something continues to hold consumers back. Worries about labour market prospects and limited wage growth are likely factors that continue to concern householders," Ms Chan said. Commonwealth bank currency strategist Joseph Capurso said the falling dollar was a combination of both weak local data and the US recovery. "The US dollar is rising against most currencies. We've seen for example against the Japanese Yen it's now buying 110 yen, the first time since just before the GFC," Mr Capurso said. But economists said the fall in the dollar would help with the transition underway in the economy from mining to non-mining sectors. A weaker Australian dollar could help domestic retailers, even after accounting for the higher costs of imported merchandise.

Australian consumers who shop online may start buying locally once domestic prices look more attractive because of the weaker exchange rate, says David Lane, director of Wealth Management at Pitcher Partners. "A pair of shoes priced at US$200, with US$25 shipping, cost A$208 when the Aussie was trading at US1.08 cents," Mr Lane said. "The same pair of shoes would be an outlay of A$258 today - a 24 per cent price rise. "The prospect of being able to try on the shoes, and wear them out of the shop, now becomes more attractive to Australian consumers," he said. Diana Mousina, Commonwealth Bank economist, said there has been a structural change since the global financial crisis in how consumers are choosing to spend their money.

"Retail sales as a percentage of total household consumption have fallen to about 31 per cent, from about 34 per cent before the GFC," Ms Mousina said. "In the retail sector spending growth looks anaemic, but that's not to say that consumers aren't spending more broadly. The actual component of consumer spending has a lot more than just retail sales," she said. "In trend terms, household consumption continues to grow at an average pace and there's nothing to suggest it will slow down anytime soon. "People are still spending on education, healthcare and utilities." With Scott Parker