Mining has been the Australian economy's backbone for some time but its benefits were essentially eclipsed by rising living costs, forcing many consumers to rationalize their spending habits.

According to Bloomberg, food and utility prices in the country have risen by 11 percent and 40 percent over the past three years, which effectively erased any disposable incomes that Australians can re-channel to non-essential buys.

Such trend, retailers said, has been squeezing their lifeline with many companies ending up projecting lower earnings in the past quarters while others have already resorted to sizing down their store numbers to cope with the slump.

The immediate results were lost jobs and many companies have indicated that if the situation would not improve for 2012, more workers would lose their posts next year.

Myer has already announced its intent to close down underperforming stores while JB Hi-Fi and Billabong, both leaders on their respective fields, have revealed decreasing sales numbers by up to 25 percent in December alone, Bloomberg wrote.

As consumers complain of dwindling purchasing power, retailers have been compelled to implement sharp discounts of up to 70 percent, a tactic that even high-end retailer David Jones was forced to adopt if only to survive the stall.

Retailers' woes were mostly attributed by experts to consumers' reluctance to part ways with their hard-earned money, with many Australians opting to put their cash in the banks.

As of the September quarter, Bloomberg said that Australia's ratio of net household savings to disposable income jumped by 10 percent as compared to the nine percent recorded in the previous quarter.

Those numbers stand on the ongoing mining boom as the country's minerals shipments continue to attract huge demands from China and India, fuelling gross domestic product growth of two digits over the past years and even ignoring the paralysing effects of the global financial crisis that hit the world in 2008.

Despite having cash but not necessarily more, local consumers have become more prudent in handling their cash, deciding only to visit the stores when sales spawned heavy discounting that allowed some retailers to precariously get by.

The holidays paved the way for some pick ups but Myer remained cautious when it told Bloomberg that "it continues to be a very challenging trading environment."

Much of the challenge came in the form of offshore online shopping, which has attracted many Australians taking advantage of the increasing purchasing power afforded by the consistently climbing Australian dollar, thanks again to the resources boom.

But its benefits seem to have evaded the country's retail sector, despite the environment becomingly more conducive to spending activities, with the Reserve Bank of Australia (RBA) rolling out rates push back two months in a row and with more to come, experts said.

Notwithstanding, the gloom is all there and Bloomberg said that JP Morgan economist Ben Jarman believes that local shoppers were fully aware that despite the better conditions in Australia, the situation abroad is generally unsettling.

"The consumer, for whatever reason, is re-evaluating the type of spending they're doing," Jarman told Bloomberg.