WA defies retail sales slump

The Reserve Bank will have to ponder an interest rate cut tomorrow after new figures showed a 0.4 per cent drop in retail sales.

The Australian Bureau of Statistics showed the fall through March which was led by a 4.2 per cent drop in clothing and footwear sales.

There was also a 1.5 per cent fall in household goods and a one per cent tumble in the other retailing sector.

Food sales improved by 0.8 per cent while sales through cafes and restaurants increased by 0.2 per cent.

Analysts had expected a 0.1 per cent lift in sales but there had been a wide range of forecast, from a jump of 0.5 per cent to a fall of one percent.

WA defied the drop, with sales here up by 0.2 per cent.

Queensland dragged down the national performance, falling by 0.8 per cent. There was also a 0.6 per cent drop in Victoria and a 0.2 per cent decrease in NSW.

Financial markets had put the chance of a rate cut at tomorrow's Reserve Bank board meeting at better than 50-50 although economists are circumspect.

A monthly measure of inflation, also released today, gives the Reserve scope to cut if it wants.

The TD Securities-Melbourne Institute measure of inflation showed overall prices lifted by 0.3 percent in April to be 2.1 per cent up over the full year.

The increases in March were driven by vegetables, a seasonal increase in health costs and communication.

Prices of petrol, footwear, books and stationery fell.

Fruit and vegetable prices jumped by 6.4 per cent in March while petrol prices fell by the same amount.

TD analyst Annette Beacher, who believes the Reserve will hold tomorrow, said there were no signs of inflationary pressures.

"Our TD-MI monthly inflation gauge correctly signalled that March quarter headline and trimmed mean inflation were benign," she said.

"The first taste of the June quarter inflation continues this benign theme, with both headline and underlying measures at or below the bottom of the RBA's two to three per cent target band."

The West Australian

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