The wealth effect from surging house prices has provided support to household spending in recent years, but according to Deloitte Access Economics partner David Rumbens it has left many people with "eye-watering" mortgages.

"Servicing these higher debts will eat into retail spending capacity going forward," Mr Rumbens says in his latest quarterly Retail Forecasts report released on Wednesday.

He expects these challenges to remain in the 2017/18 financial year, forecasting retail spending growth to slow to 2.6 per cent from three per cent in 2016/17, although he is predicting improved income growth over the next few years to drive spending.

"But the imminent arrival of US giant Amazon clearly presents a series of challenges for existing retailers in terms of heightened competition in both online and in-store sales," Mr Rumbens said.

He expects prices will get squeezed as Amazon has the scale to absorb very low margins in most of its products, and it will take strong brands and excellent customer service for Australian retailers to keep shoppers where they want them.

National Australia Bank's monthly business survey on Tuesday showed that retail is one patch of softness amongst Australian firms.

Two gauges of consumer confidence - pointers to future spending habits - are due on Wednesday.

The weekly ANZ-Roy Morgan index - delayed by a day because of the Queen's Birthday holiday - rose for a third straight week last week, the longest sustained increase this year.

The monthly Westpac-Melbourne Institute consumer confidence gauge fell in May after failing to get a lift from the federal budget.