"The Fair Work Commission's decision to raise the minimum wage (by 5.2 per cent or $40 per week) is certainly welcome news for many of the lowest-paid workers across the country where it is expected that those extra dollars will be pumped back into the economy in terms of spending on groceries and other household essentials," UTAS associate head research performance and senior lecturer in marketing Dr Grimmer said.

"At the same time, increases to the minimum wage and award minimum wages will be challenging for some small business owners who are also struggling with price increases for things like fuel, electricity and gas and other costs associated with running a business."

Dr Grimmer said retail was facing a perfect storm of rising interest rates and inflation, along with increases in grocery and fuel prices, and that was affecting discretionary consumer spending.

"For many households, there simply isn't enough extra cash to go around and many people are tightening their belts to try and cope with price rises across a range of products and services," she said.

"There is no doubt the current cost of living pressures mean that many Australian shoppers are delaying discretionary spend or putting off new purchases altogether and funnelling household income into essential goods and services."

Wage increases fell well below inflation in recent times and the inflation rate is expected to keep rising for a while.

Reserve Bank governor Philip Lowe recently signalled he expected annual inflation to reach 7 per cent by the end of the year, and others have predicted higher numbers.

Hobart inflation (the best available measure for Tasmania) increased by 5.8 per cent in the year to March, according to the Australian Bureau of Statistics.

Transport costs surged by 19.5 per cent, largely due to rising fuel prices.

Other rising costs included:

Dr Grimmer said the Tasmanian retail sector had been robust during the coronavirus pandemic and benefited from Tasmanian shoppers supporting local stores.

"Hopefully we see the shop local trend continue as we move through 2022, but it is clear that there are still economic challenges across multiple fronts for consumers and businesses," she said.