Lower interest rates help fuel rise in Oz spending

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Australian retail spending has lifted for a 10th straight month, supported by lower interest rates and improved household balance sheets.

Consumers spent A$24.126 billion in March, 0.3 per cent more than in February, with seasonally adjusted sales of clothing, footwear, accessories and department store goods all stronger.

By contrast, there were big falls in spending on takeaway food, electrical and electronic goods.

The monthly result, although positive, was a touch below economists' expectations and softer than February's 0.7 per cent increase.

CommSec economist Savanth Sebastian said stronger household balance sheets had buoyed the March result.

"The lift in the share market and rising house prices, that's all supported equity and in turn the household balance sheet looks a little bit more attractive," Sebastian said.

"Lower interest rates means there's a little bit less in terms of repayments on mortgages.

"As a result of that you're starting to see a modest lift in retail activity."

Over the March quarter, retail sales rose 0.7 per cent to A$69.789 billion, in seasonally adjusted volume terms.

JP Morgan economist Tom Kennedy said the quarterly retail spending result was a little bit "light" and didn't bode well for the next set of economic growth figures, due on June 3.

"The [international] trade numbers were also quite soft in the first quarter of the year, so it looks like the hurdle for a solid GDP print is certainly rising," he said.

Kennedy said things aren't likely to get any easier this year. "A lot of the tailwinds for the consumer are now fading because you have oil prices moving higher and you also have interest rates likely to level off.

"With those two factors no longer supporting consumption, it will be interesting to see how the consumer responds in the back half of this year."

- AAP