A survey by Bloomberg of 20 economists predicted a rise of 0.5%.

Australia was one of the few major economies, to expand in the first quarter following hand outs by the Federal Government. Also helping is the lowest interest rates in 49 years. Retailers like David Jones Ltd. and JB Hi-Fi Ltd, have both raised their profit forecasts in recent weeks.

According to Bloomberg "Interest-rate cuts have worked their magic, together with the stimulus applied by the government," Craig James, chief equities economist at Commonwealth Bank of Australia in Sydney, said ahead of the report. "The lift in consumer confidence is translating into greater activity at cash registers, and tax cuts will give consumers more reason to visit shopping malls."

A recent Westpac consumer sentiment report said that consumer confidence jumped by the most in 22 years in June and business sentiment in May had the biggest gain since 2001.

Sales at department stores advanced 5.5 percent from the previous month and spending on clothing gained 2.9 percent, today's report showed. Sales at restaurants climbed 1.4 percent.