Poor trading and profits have been the result in the dramatic drop in retail business conditions, as reported by the National Australia Bank monthly business survey for July 2012.

According to the survey, business conditions for the retail sector were “worryingly weak” dipping down 12 points to -15 points.

NAB said this is likely to reflect the unwinding of the government’s $1.3 billion in payments to household from mid-May to end-June and was primarily carbon tax-related.

As a result, overall business conditions worsen – down 2 points to -3 index points – to be trending at their lowest level in three years.

At the same time, retail prices growth was broadly flat at 0.1 per cent and, combined with solid purchase and labour costs growth, imply further discounting.

Despite this, business confidence improved across all industries in July, with retail up to +4 index points.