Retail spending rose 0.4% in March

Retail sales beat market expectations in March, but growth was modest and nothing to get too excited about, an economist says.

Shoppers in Pitt Street Mall in Sydney. (AAP) Source: AAP

Australian retail spending rose 0.4 per cent in March, beating economists' expectations.

However, retail sales rose by 0.5 per cent in the quarter, lower than the market forecast of 0.7 per cent.

Total retail spending was $24.95 billion in March, up from $24.85 billion in February, the Australian Bureau of Statistics said on Thursday.

AMP chief economist Shane Oliver said the figures, while beating market expectations, were nothing to get too excited about.

"The basic picture in retailing is little changed, it's still growing but the pace of growth is fairly modest," he said.

The rise in sales was led by a 1.1 lift in clothing sales and food sales were also 0.6 per cent higher.

Meanwhile cafes and restaurants were flat and department store sales were 0.5 per cent lower in March.

Westpac senior economist Matthew Hassan said while sales were subdued, they provided only a limited guide to consumer spending estimates.

"Most recently the retail data failed to detect the pick-up in spending momentum over the second half of last year," he said.

"On balance though the first quarter 2016 result does suggest a slight softening in consumer demand early in the year, particularly given reported declines in vehicle sales and fuel consumption and what is likely to be a smaller decline in household savings compared to the fourth quarter of 2015's big fall."

However, JP Morgan economist Tom Kennedy said it was a reasonable outcome and the RBA's rate cut on Tuesday would provide another kick for the sector later this year.

"Given that petrol price are low, house prices are still elevated from where they were a couple years ago and the (RBA's) monetary easing, the consumer should fare okay in 2016," he said.