It is one of the big questions hovering over the Australian economy: has the combined impact of lower borrowing costs and tax cuts loosened consumers' purses strings?

Key points: NAB forecasts retail spending has lifted only marginally from the July slump in sales

NAB forecasts retail spending has lifted only marginally from the July slump in sales CBA says households spending their tax cuts are likely to drive sales up almost 1pc

CBA says households spending their tax cuts are likely to drive sales up almost 1pc Both banks agree the domestic economy still remains weak and will need the Reserve Bank to deliver more interest rate cuts

Oddly enough, two of the biggest banks, handling a large chunk of the roughly $27 billion monthly retail sales that ebb and flow between customers and retailers, have very different opinions.

While the CBA has a reasonably upbeat view, tipping retail sales will rise by a solid 0.9 per cent over August, NAB says sales will be up just 0.3 per cent.

Even then, NAB sees the bounce as largely due to retailers enduring a very disappointing July.

On ABS figures, retail sales fell 0.1 per cent in July, driven down by a sharp decline in discretionary sales outpacing a small lift in spending on essential household items.

NAB's view is the data flow from its cashless transactions — customers using debit and credit cards, BPAY and Paypal — does not support the view the tax and interest rates cuts are flooding back into retail.

"We remain concerned that there has been little growth in real consumption so far in Q3 [the September quarter], with limited prospects for pick-up in the short term," NAB chief economist Alan Oster said.

"So far, stimulus provided by policy makers has had limited impact or has been unable to offset the countervailing headwinds faced by the household sector."

CBA used a different methodology based on a Household Spending Intentions survey and Google Trends search data, as well as the transaction history of its 2.5 million customers. It says a wave of pent up consumer activity is about to support struggling retailers.

"When applying our estimated seasonal factors we forecast that retail trade rose by $250 million in August. That equates to a lift of 0.9 per cent over the month," CBA's Gareth Aird said.

"Such an outcome will give policymakers confidence that households are responding to stimulus," Mr Aird added.

RBA still cautious about retail recovery

While the Reserve Bank would be happy with the CBA's reading of the economy, judging by the release of this month's rates meeting minutes, it was still more aligned with NAB's view.

"The low- and middle-income tax offset (LMITO) was expected to boost household income, and thus support consumption growth, in coming quarters," the minutes noted.

Using is own liaison with retailers, the RBA found consumer spending had yet to lift noticeably.

The muted spending result is also supported by the most recent Westpac survey of consumer confidence which found households are more likely to save than spend their tax refund.

CBA's Gareth Aird disagrees.

"Our working assumption, based on the household response to the 2009 "Rudd cash splash", has been that households will spend around half of the rebates," he said.

"Based on $7.5 billion of rebates, that's around $3.75 billion more in household expenditure than otherwise."

CBA says the upshot is an extra $300 million a month flowing straight into retailers' coffers.

"The early evidence indicates that our expectations are being met," Mr Aird said.

More rate cuts

NAB's breakdown of spending points to any significant growth in consumption spending being limited to "essentials", largely in the form of services.

"With wage growth remaining weak, sluggish household income growth is likely to remain a headwind to consumption growth, Mr Oster said.

"High debt levels, low savings rates and stretched budgets on the prior run-up in essentials prices are likely to also continue to weigh until income growth sees a substantial lift.

"This does not bode particularly well for the retail sector."

While the CBA and NAB have different view on the immediate fortunes of retail, they share a similar belief the RBA still has more to do and at least another two rate cuts are in the pipeline.