Australians went on a record spending spree in November, buoyed by the end of last year's COVID-19 lockdowns.
But the subsequent emergence of the highly infectious Omicron variant has clouded the outlook.
Retail trade soared 7.3 per cent in November, the fourth-strongest monthly rise on record, lifting sales to their highest level ever at $33.4 billion.
The previous record for sales was set in November 2020, the Australian Bureau of Statistics said on Tuesday.
Victoria saw the largest increase in the month, rising 20 per cent after its Delta-variant lockdown ended in late October, and following the earlier opening up from restrictions in NSW and the ACT.
Australian Retailers Association CEO Paul Zahra said retailers overall had a strong November, aided by the end of COVID restrictions, record-breaking Black Friday sales and early shopping ahead of Christmas.
But he said businesses are facing fresh challenges with the rising cases of Omicron.
"We've entered new territory in the pandemic with Omicron decimating workforces and impacting supplies and deliveries of essential goods," Mr Zahra said.
BIS Oxford Economics senior economist Sean Langcake expects the Omicron variant will have limited impact on the December sales figures, but will pose a challenge in early 2022.
"Consumer caution will reduce in-store foot traffic, while disruption to supply chains and labour availability will further limit sales," he said.
Separate data showed consumer confidence has fallen across Australia as a result of the rapid spread of the Omicron variant.
In the first release for 2022, the weekly ANZ-Roy Morgan consumer confidence index dropped 2.2 per cent compared to its pre-Christmas level, the last time the survey was conducted.
"The rapid rise of Omicron cases across Australia is likely responsible for the dampened outlook in the first week of January," ANZ head of Australian economics David Plank said.
Mr Plank noted that in the decade from 2011 to 2020, consumer confidence had risen 2.6 per cent on average in the first survey in January.
"So this result is even weaker than it seems," he said.
Shadow treasurer Jim Chalmers was unimpressed, saying Australians are yet again paying the price for the Morrison government's failures in managing the pandemic and the economy.
"Just a few weeks ago, Scott Morrison and Josh Frydenberg were talking about the 'real momentum' of the recovery but those gains have once again been squandered," he told AAP.
However, the confidence survey did find respondents are still relatively happy about their own financial circumstances.
The sub-index for views on 'current financial conditions' increased by 1.4 per cent, while 'future financial conditions' rose by 0.7 per cent.
"This potentially sets things up for a rapid rebound once people are more confident about health outcomes," Mr Plank said.
That said, views on 'current economic conditions' slumped 8.7 per cent to the lowest level since September last year and at a time when the economy was in contraction from having over half the population in lockdown.
The ABS also released international trade figures for November, which showed the surplus shrank to $9.4 billion after a downwardly revised $10.8 billion in October,
Imports jumped six per cent, outpacing a two per cent increase in exports.
Australian Associated Press
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