Retail sales have increased by 0.7 per cent in July compared with an increase of 0.4 per cent the previous month, according to the latest Australian Bureau Statistics (ABS) Retail Trade figures.

Cafes, restaurants and takeaway food services recorded the largest seasonally adjusted increase of 5.3 per cent followed by clothing, footwear and personal accessory retailing. Meanwhile, household good retailing decreased by -1.7 per cent in July after strong results in June and department stores also fell by -0.7 per cent in sales.

The largest increase was found in Victoria (1.7 per cent), Queensland (1.5 per cent) and New South Wales (0.6 per cent). But sales also decreased in Western Australia (-1.8 per cent), the Australian Capital Territory (-0.7 per cent) and Tasmania (-0.3 per cent) in the same period.

However, the Australian Retailers Association (ARA) said the results were “encouraging but not enough”.

ARA executive director Russell Zimmerman said retailers faced their first month of increased wage bills in July and would want to see a few more months of some significant growth across all retail categories before they felt confident about business conditions going forward.

“Eating out seems to be a small luxury consumers are happy to treat themselves. However, it’s not the same story across the board and we’re still getting emails every day from retailers across the country saying this is one of the worst years of trade they can remember,” he said.

Zimmerman also warned that if businesses do not start improving across all retail sectors, small retailers who are already struggling to manage increased wage bills will have to start letting go of staff.

“This is not the time for the RBA to look at increasing interest rates.”