Retail prices have weakened and appear to have fallen slightly in the first quarter of 2012, according National Australia Bank monthly business survey for March.

Retail prices have dropped 0.4 points from 0.3 in February to -0.1 in March. This softening is consistent with core information readings of around 0.5 per cent.

At the same time, the NAB survey show that retail is still the weakest industry in terms of business conditions where it remained unchanged and a “very subdued levels” of -15 points. This is in comparison to stronger performing sectors like mining, transport & utilities, recreation & personal services and finance/ business/ property.

“The persistent divergence in industry conditions indicates that the Australian economy is undergoing a structural transformation towards mining and service-based industries, and away from traditional manufacturing and discretionary retailing,” the survey said.

Overall purchase cost pressures eased in March, with growth slowing to 0.3 per cent (at a quarterly rate), down from 0.6 per cent in the previous month. Purchase costs pressures increased solidly in transport & utilities – consistent with the recent rise in petrol prices – while they softened most notably in retail and manufacturing.