Christmas apparently failed to bring in the big bucks that many retailers had hoped for, as new figures show that spending across the economy was softer than expected.

The Commonwealth Bank Business Sales Indicator (BSI) found there was a 1.9 per cent drop in spending in seasonally adjusted terms during December 2012, following a rise of 2.4 per cent the previous month.

The indicator is calculated by tracking the value of payments made via credit and debit cards processed through Commonwealth Bank point-of-sale terminals.

As general manager of operations and sale strategy for local business banking at Commonwealth Bank Lex Thornton explained, consumers have been prudent – a trend that is unlikely to change any time soon.

He commented: “We know that many small businesses across the country were hoping for a buoyant festive season. While we saw a lift in spending in November, unfortunately the BSI showed that sales softened throughout December.

“For 2013 it is important that businesses make sure they have solid processes and plans in place to navigate future volatility.”

Victoria and the ACT proved to be the best places to do business in December as sales were up 0.5 per cent, followed by New South Wales with a rise of 0.4 per cent.

Only two states and territories recorded weaker sales during the period in question – South Australia and the Northern Territory both experienced declines of 0.3 per cent.

Apparently consumer attitudes have taken a hit over recent months, as the recent Westpac Melbourne Institute Index of Consumer Sentiment showed that people are still reluctant to spend.

The index increased six per cent in January, making it the sixth month in a row the index has registered at or above 100 points.

Analysts believe reductions to the cash rate will help encourage people to spend more.