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Photo: AP

The ACT has recorded the biggest drop in retail sales across the nation in August, led by falls in spending on restaurants and cafes, as much of the rest of the country enjoyed stronger-than-expected growth.

Retail spending in Canberra fell 0.8 per cent in seasonally adjusted terms over the month, pushed down largely by a $5 million fall in spending on restaurants and takeaway food services, from $62.3 million in July to $57.2 million in August, seasonally adjusted.

With spring in the air, spending on hardware, building and garden supplies received a boost, as did spending on clothing. But Canberrans spent less on furniture, homewares, and electronic goods over the month.

National retail sales grew 0.4 per cent in August, surpassing economists' expectations of a 0.3 per cent rise, on the back of strong sales in department stores.

Sales in department stores soared by 6.4 per cent. Cafes, restaurants and takeaway food sales also performed well, lifting by 0.4 per cent. Clothing, footwear and personal accessories registered a rise of 0.3 per cent for the month, while food retailing grew by 0.1 per cent.

"Consumers have started to get their groove back," Moody's Analytics associate economist Katrina Ell said.

"The warming property market is lifting confidence and encouraging higher discretionary spending given the family home is typically a household’s largest asset."

But the monthly growth was weighed down by a decline in sales of household goods and other retailing, which includes newspapers and books, and pharmaceutical and cosmetic goods.

Overall retail turnover strengthened by a seasonally adjusted 2.3 per cent from the previous corresponding month.

The dollar rose about one-tenth of a cent to the day's high of 92.29 US cents on the back of the retail data.

In July, retail sales rose by a seasonally adjusted 0.1 per cent. It followed an unchanged level of sales in June and a small rise of 0.2 per cent in May. Retail sales have remained subdued since two strong months of growth in January and February.

Internet spending slipped a seasonally adjusted 0.1 per cent in August, according to the National Australia Bank’s online sales index. Online sales were up 9.6 per cent to $14.2 billion over the past year, the index showed.