Customers continue to play it safe by not spending Consumers are still being cautious about spending. Picture: ThinkStock Source: Supplied VICTORIANS are keeping their wallets shut, with a spending strike extending to its third month. Households are using income from lower interest rates to pay off mortgages and boost savings rather than hit the shops, economists say. Latest retail sales figures from the Australian Bureau of Statistics show consumers are cutting spending on large one-off discretionary items and on dining out. Overall, the nation's retail sales climbed 0.1 per cent, seasonally adjusted, in May, compared with April. Most economists had been tipping a 0.3 per cent rise. The ABS has also revised down its April figure from a 0.2 per cent rise to a 0.1 per cent contraction. The national figure for May was weighed down by spending falls in NSW and Victoria. Retail sales fell 0.3 per cent in Victoria and 0.4 per cent in NSW. All other states recorded a rise. Since March, sales growth has stalled in Victoria for some retail sectors, and gone backwards for others. At a national level, consumers spent 0.6 per cent less at restaurants and cafes and 0.3 per cent less on electronics, furniture and hardware, but spending at department stores climbed 0.8 per cent. Despite the silver lining, investors focussed on the overall gloom around retail spending, wiping 2.9 per cent from Myer and Harvey Norman share prices yesterday. David Jones shares fell 1.9 per cent. Bank of Melbourne senior economist Jo Heffernan said households benefiting from lower interest rates were using most of the gain to shore up their finances. "We are also seeing a move away from discretionary spending and that does suggest that consumers are only spending money on what they need to," Ms Heffernan said. Commonwealth Bank economist Gareth Aird said the recent fall in the Australian dollar was good news for local retailers as it made overseas holidays and purchases less attractive. "While consumers are spending, they are selective with where they spend their money, and retail has been missing out," Mr Aird said.