The ACT has topped the country for retail sales growth over the past year, riding the wave of higher public spending by the federal and ACT governments.
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The latest retail forecasts from the Deloitte Access Economics report said a strong economic performance by the ACT had seen real retail sales grow by 3.8 per cent over the year to June 2017.
Deloitte Access Economics partner David Rumbens said it was unusual for the ACT to top retail growth, but it came on the back of population and employment gains.
He said the growth was stimulated by a higher spending 2017-18 federal budget and ACT government spending on infrastructure, including the light rail project.
The report showed a stronger housing market, low unemployment and high business confidence also contributed to the relatively strong retail performance, 1.3 percentage points higher than the national average.
"The fact the federal government's budget has moved away from trying to cut spending, matched by higher taxes is actually a positive for the ACT," Mr Rumbens said.
"The key drivers of retail spending are employment growth and income growth; the federal government as a major employer in the ACT obviously has a major influence on that."
Canberra Business Chamber chief executive officer Robyn Hendry said retail growth, while positive, had to be seen within the context of the last few years. It had taken a number of years to build consumer and business confidence up after a period of uncertainty.
Ms Hendry said the ACT had recently seen significant retail expansion, through major brands and smaller retailers in Kingston and Braddon areas.
"We know that in 2013 and even in 2014 we had a period of high uncertainty where we lost about 16,000 public sector jobs over a couple of year period," she said.
"It certainly throws people's discretionary expenditure.
"We've come off that base of great uncertainty, we've now got a good stable period."
Ms Hendry said it was still tough for retailers to make a profit, with increased pressures around energy prices and the Australian dollar.
The sale of 1100 Mr Fluffy homes to the ACT government added to the retail boost, creating an unusual demand for housing goods when people were forced to relocate.
"The growth is good news for retailers compared to where we were not very many years ago, but at the same time what's worthy of noting is that the the margins are difficult," Ms Hendry said.
"People are having to sell a much larger volume to cover costs, that's the challenge in retail now."
While the report found retail spending picked up across the country in the quarter to June, consumer sentiment drifted downward at the same time.
Mr Rumbens said that downward trend was influenced by concerns over financial risks, including talk of a slowdown of house price growth and high levels of household debt.
"And in the face of oncoming competition from the likes of Amazon, widespread aggressive discounting to lure in the consumer dollar, and rising energy prices, it's likely retailers aren't so happy either," he said.
