Rate cut unlikely after retail data Australia's retail sector may be doing just well enough to stand in the way of a rate cut, even with a drop in sales in March. Retail sales fell 0.4 per cent in March, with household goods and clothes retailers suffering the biggest declines, according to figures released by the Australian Bureau of Statistics on Monday. But economists say the monthly figures may be just a blip in an otherwise strong start to the year for the sector. Retail spending was up 2.2 per cent over the three months to March, the strongest quarterly growth in six years. By contrast, spending rose only 2.6 per cent for the whole of 2012. HSBC Australia chief economist Paul Bloxham said even with the fall in March, the retail sector was looking relatively healthy. "In general, they are actually quite good numbers," he said. After very strong numbers in January and February, a small retreat is still a very positive result. He said the strength of the retail sector could dissuade the Reserve Bank of Australia from cutting the cash rate at its monthly board meeting on Tuesday. "I think they (the RBA board) would look at them (the retail figures) as broadly positive," he said. They don't tend to get hung up on any one month's numbers and it's certainly the case that the trend in the retail numbers is improvement. The RBA has kept the cash rate on hold at three per cent since the start of the year as it waits to see the full economic effects of the 1.25 percentage points of cuts it delivered in 2012. JP Morgan economist Ben Jarman agreed that a rate cut was unlikely following the retail figures. "We don't think the weakness in the numbers are there to justify a cut yet," he said. If you've got retail spending growth running at two per cent a quarter you can't say the numbers are weak. But Australian Retailers Association (ARA) executive director Russell Zimmerman said the March fall in sales was a sign weak consumer confidence was hurting retailers. He called on the RBA to cut the cash rate half a percentage point at its Tuesday meeting. "Overall, the 0.4 per cent decrease in March shows the lack of consumer confidence in the whole economic situation in Australia," he said. The ARA still firmly believes the right cash rate sits at around 2.5 per cent or below. Clothing retailers suffered the biggest declines in March, with sales down 4.2 per cent, followed by households goods retailers who suffered a 1.5 per cent drop. Only food retailers, up 0.8 per cent, and cafes, up 0.2 per cent, experienced growth in sales in March. But sales were up in all subsectors during the quarter, with household goods retailers, up 3.7 per cent, recording the biggest rise.