Australia's retailers are facing a consumption drought as the country's second biggest state locks down to fight the coronavirus.

Data showed sales volumes suffered their biggest plunge in two decades in the second quarter.

Retail sales adjusted for inflation slipped 3.4% in the June quarter, according to data from the Australian Bureau of Statistics, the steepest decline since the introduction of the goods and services tax in 2000.

Analysts were expecting a 3.2% fall in the quarter.

The larger-than-expected drop suggests consumer spending will be a drag on gross domestic product growth in the June quarter.

The sales downturn was driven by cafes & restaurants, off 29.1%, and clothing, footwear and personal accessory, down 22%. There were also losses in food retailing.

The slump in volumes contrasts with value-based retail numbers, with June seeing a solid 2.7% jump in monthly sales and May recording a stellar 16.9% rise as shops, restaurants and pubs fully re-opened across large parts of Australia.

Economists warned the outlook was clouded by a second wave of coronavirus infections in the state of Victoria, with weekly spending data by the country's major banks already showing signs of moderation.

Victoria declared a "state of disaster" this week following a relentless surge in coronavirus infections since late June.