Christmas came early for many Australian retailers after the Australian Bureau of Statistics released positive Retail Sales data for the month of October.

In October nominal retail sales increased 0.5% to a seasonally adjusted $25.6 billion, making it three months in a row of increases.

Shareholders of Woolworths Limited (ASX: WOW) and Coles operator Wesfarmers Ltd (ASX: WES) will be pleased to learn that food sales were one of the stronger areas of retail in October. Food sales rose 0.6% month on month.

Elsewhere sales of household goods continued to perform strongly with a 0.7% rise. I believe this should help support the strong growth we have seen from the likes of Nick Scali Limited (ASX: NCK), JB Hi-Fi Limited (ASX: JBH), and Harvey Norman Holdings Limited (ASX: HVN).

There were further gains in cafes, restaurants and takeaway food services. Sales increased 0.4% in October, bringing this sector’s 12-month growth to 7.3%. No wonder Domino’s Pizza Enterprises Ltd. (ASX: DMP), Collins Foods Ltd (ASX: CKF), and Retail Food Group Limited (ASX: RFG) shares have gone gangbusters this year.

It wasn’t all good news though. Shareholders of Premier Investments Limited (ASX: PMV), Lovisa Holdings Ltd (ASX: LOV), and RCG Corporation Ltd (ASX: RCG) may be concerned to see clothing, footwear, and personal accessory retailing fall 0.4% in October.

Finally, the news does not look quite so positive for Myer Holdings Ltd (ASX: MYR). Overall, department store sales fell 0.4% last month. Over the last 12 months the sector’s sales are also down 0.4%, making it the only side of retail trending lower during this time.

As we head into the all-important Christmas shopping season I believe the Australian retail industry looks reasonably healthy and offers investors some great options. My pick of the sector would have to be Retail Food Group. Its strong growth and generous dividend make it a great buy and hold investment in my eyes.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.