Australia's retail sector is in a better place than in was a year ago, but growth remains soft.

Retail spending was up 0.2 per cent in April, seasonally adjusted, compared to the previous month, according to Australian Bureau of Statistics.

The figure followed strong growth in spending in the first two months of 2013 and a slight fall in March.

UBS economist George Tharenou said the sector was performing better than it was last year ago but still faced challenges.

"There has been an improvement in the sector relative to last year but the overall trend is still soft," he said.

"But there are signs that the low interest rate environment will help support growth in the sector."

Meanwhile, other figures released by the ABS show business inventories declined by 0.6 per cent, seasonally adjusted, in the March quarter.

Mr Tharenou said the figures would detract from gross domestic product (GDP) growth in the quarter.

"That does suggest some detraction from growth, but at the same time company profits were up in the quarter so I wouldn't get too carried away about the downsides," he said.

The ABS will release GDP figures for the March quarter on Wednesday.

Commonwealth Bank economist Gareth Aird said retail spending was a little bit below expectations but there were factors affecting the figures.

"What we've noticed in the retail space is there is quite a lot of discounting," he said.

"So the series we're getting ... is looking at the dollar amount not the volume of sales and because we've had discounting in household goods and department stores, that acts as a drag on total retail sales growth (in dollar terms).

"The conditions are in place for decent retail trade growth because we've got very low interest rates, which increases consumer spending power."

Mr Aird said the falling Australian dollar should help support local businesses, and expects there will be another central bank interest rate cut in 2013 but not in the next few months.

The West Australian

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