The Morrison government's income tax cuts and lower interest rates have not been enough to get shoppers into the nation's malls, with retail sales falling and damaging expectations of a post-election confidence boost.

The Australian Bureau of Statistics on Tuesday reported retail sales in July, which analysts and the government had expected to see lift on the back of tax cuts that started flowing into bank accounts from mid-July, fell 0.1 per cent.

The Australian dollar dropped immediately after the release of the results, from US67.31¢ to US67.18¢.

Sales were down in almost every state and territory, led by South Australia and the ACT where they dropped 0.5 per cent. NSW and Victoria both fell 0.1 per cent in seasonally adjusted terms. Only Western Australia and the Northern Territory bucked the national trend.