Online retail sales have sagged as a spending frenzy fades in the aftermath of the government’s budget-related small businesses tax cuts.

The latest NAB Online Retail Sales Index shows a 1.4 per cent dip in July, a significant deterioration on the revised 2.3 per cent growth recorded in June.

NAB chief economist, Alan Oster, said Treasurer Joe Hockey’s $20,000 instant asset write-offs for small businesses, announced in the May budget, could have contributed to the June surge.

“It’s part of the reason why June was so strong and, therefore, why July was so weak,” he said.

“We think (now) we’re getting back to normal.”

Despite the month’s slowdown, online sales rose 6.2 per cent to $17.4 billion in the year to July.

NAB said sales increased year-on-year across all retail categories except specials on `daily deals’ websites, with electronic games and toys leading the way despite slowing from the previous month.

Growth also accelerated in sales of media items, homewares, and appliances.

Fashion, grocery, and liquor sales rose at more moderate single-digit rates, while department and variety stores had much slower growth than in June, NAB said.

Online sales now make up around seven per cent of traditional retail spending.

AAP