Department store sales fell by 1.1 per cent while the broad "other retailing" sector dropped by 0.1 per cent.

Sales also dropped in Victoria, by 0.5 per cent, Queensland (0.1 per cent), the ACT (1.8 per cent), South Australia (0.3 per cent), Tasmania (0.2 per cent) and the Northern Territory (0.3 per cent).

The only increase was in WA and even that was a small 0.1 per cent improvement.

Analysts had been prepared for a weak December after anecdotal evidence pointed to consumers winding back their spending plans from late November.

Not only were sales down but the volume of goods sold were well short of expectations. Through the December quarter, retail volumes rose by 0.1 per cent, pointing to a weak contribution from households in the looming national accounts.

Separate figures from the Federal Chamber of Automotive Industries also point to the sharp slowdown in the economy.

Almost 82,000 cars were sold in January, a 7.4 per cent drop on the same month last year.

Over the past six months, sales have edged down by 7 per cent compared to the same six month period in 2017.

Chamber chief executive officer Tony Weber said the drop in sales was largely due to ebbing consumer confidence.

"The current economic environment is a challenging one, with an imminent federal election, a declining real estate market and tighter lending practices," he said.

The Australian Industry Group's performance of services index, released early on Monday, showed a 7.8 point drop in January. It fell to its lowest level since October 2014 and is now well down on the point at which the sector is expanding.

The Reserve Bank, which is meeting on Tuesday, is expected to leave official interest rates on hold.