The sector recorded its second consecutive quarter of growth in December with a 2.7 per cent increase in sales, but the boost remained below average and strong performances in Victoria and New South Wales.

"Public sector cutbacks are continuing to take their toll on broader economic conditions in the ACT and the housing market has weakened," the report said.

"With continuing pressure on the federal budget the backdrop remains challenging and the short-term outlook for the ACT's retail sector remains weak."

The Deloitte report, released on Wednesday, comes after the Australian Bureau of Statistics recorded a 1.9 per cent decline in the ACT retail sector during January – the largest drop since November 2011.

Australian National Retail Association chief executive Anna McPhee said the largest falls were seen in the clothing sector with a 10 per cent drop in the household goods category with an 11 per cent decline.

Deloitte has predicted modest growth for the ACT retail sector in coming years with a 0.4 per cent increase forecast for the 2014-15 financial year, followed by a 3.2 and 3.5 per cent increase in coming years.

"While consumers are spending more they continue to be very conscious of value and new online and bricks and mortar competition is keeping retailing a very competitive industry," the report said.

Nationally, the growth rate of 3.6 per cent over the year was due to strong performances in New South Wales and Victoria, with the rest of Australia contributing just 0.9 per cent growth collectively.

"New South Wales and Victoria are punching well above their population weights when it comes to retail spending performance at present," the report said.

The report found falling petrol prices and low interest rates had eased pressure on the retail sector across Australia by leaving households with more to spend on goods and services.

But a recent Australian Competition and Consumer Commission report found the ACT had not experienced the tumbling petrol prices reported interstate, despite the emergence of discount petrol stations such as Costco.

The average price gap between Canberra and the five largest Australian cities ballooned from 5.5 cents in July to 17 cents a litre in January.

The report found the average difference for Canberra during the 201-14 financial year was 6.8 cents a litre.

"A fall in the price of unleaded petrol of around 26 cents per litre over the past four months is adding around 0.5 per cent to total disposable income," the Deloitte report said.

"That is a significant boost, particularly when you consider that in the wake of last year's federal budget there was considerable concern raised about the impact on consumers of the reintroduction of fuel excise indexation."

Nationally, household goods sales were 11 per cent higher than the previous December quarter while retail spending at clothing stores and restaurants continued to see modest growth.

Department stores recorded a 1.9 percent increase in sales during the December quarter but a weak performance earlier in the year dragged the annual growth rate back to 1.8 per cent.

Household goods sales rose by a 5.5 per cent during the December quarter with sales rising to 11.3 per cent over the past year.

Cafes, restaurants and takeaway food sales fell by 0.7 per cent during the December quarter with growth over the past year easing to 3.5 per cent.