September retail sales were flat and retail prices fell 0.4% over the quarter, the biggest drop in prices in 18 years, according to Craig James, Chief Economist at CommSec.
Retailers have been successful in cutting costs, allowing prices to fall, but strong local and global competition is also serving to keep prices low, James says.
"Consumers are the big winners from retail competition. While some complain about higher electricity prices, in the background prices are falling for a raft of retail goods.
"Food, clothing and household goods have never been more affordable. Add in record affordability for cars and consumers are out in front despite slower wage growth," James notes.
The Australian dollar weakened by about half a cent against the US dollar after the softer-than-expected retail sales data was announced.
Watch CommSec’s analysis and forecasts for the economy and the cash rate over the next few months.