Consumer spending perked up to its strongest level in nearly two years at the end of last year.
Official numbers show seasonally adjusted sales volumes (sales not affected by price moves) rose 1.7 percent in the three months to December, compared with a 0.3 percent reading in the previous quarter.
That was the best quarterly number since March 2017.
The value of total retail sales was $26.3 billion in the December 2018 quarter, up 4.5 percent ($1.1 billion) on the December 2017 quarter.
Increased spending on cosmetics, pharmaceuticals, electronics, and food and beverages more than offset falls in department store, DIY and furniture sales.
ANZ senior economist Liz Kendall said consumers had not put away their wallets despite some challenges.
"There certainly are some headwinds weighing on the household sector at the moment, and you can see that coming through in terms of what people are spending their money on," Ms Kendall said.
"But people are so far still feeling good and they're looking through those headwinds, like the softening housing market, and still willing to spend at this stage."
Ms Kendall said it was still tough for retailers with rising costs, competition and squeezed profit margins.
Core retail sales, which leave out fuel and vehicle related sales, grew by 2 percent, reflecting the sharp fall in prices.