Retail trade increased slightly in April with hopes another interest rate cut will help the continuing pressure for retailers.

The ABS Retail Trade figures show the Australian retail turnover rose 0.2 per cent in April 2013, seasonally adjusted, following a 0.4 per cent fall in March 2013.

The largest contributor to the rise in April 2013 was food retailing (0.5 per cent) followed by clothing, footwear and personal accessory retailing (1.8 per cent), cafes, restaurants and takeaway food services (0.5 per cent) and other retailing (0.1 per cent). These rises were partially offset by falls in department stores (-2.0 per cent) and household goods retailing (-0.6 per cent). Over the longer term, the largest contributor to growth remains food retailing (up 0.6 per cent in trend terms).

Australian Retailers Association (ARA) executive director Russell Zimmerman said the minimal rise was a further sign that the retail sector is still facing significant challenges and the Reserve Bank of Australia (RBA) must reduce interest rates to at least 2.5 per cent when it meets.

“Despite the interest rate cut of 25 basis points to 2.75 per cent last month, the RBA needs to cut official rates to 2.5 pe rcent to get variable mortgage rates to a level of 6 per cent in order to address a compromised economic situation,” he said.

“The ARA still firmly believes the right cash rate sits at around 2.5 per cent or below. Of course, the banks also need to bring interest rates down to levels which match other economically comparable countries in light of their good profit results and alleviate pressure on their consumer and business borrowers.

“Overall, the 0.2 per cent increase in April illustrates that consumers are still holding on to their purse strings and discretionary spending remains tight. It is evident there is a lack of consumer confidence in the whole economic situation in Australia.”

The state which was the largest contributor to the rise was New South Wales (0.6 per cent) followed by Victoria (0.3 per cent), the Australian Capital Territory (1.0 per cent), Queensland (0.1 per cent) and South Australia (0.2 per cent).

Through the year, Australian retail turnover rose 3.1 per cent in April 2013, seasonally adjusted, compared to April 2012.

National Retailers Association chief executive officer Trevor Evans said while the RBA might be tempted to wait for another month for the situation to improve after last month’s cut, the latest retail trade data showed a desperate need for another cut now.

“The disappointing trade figures show growth in the vital retail sector is stalling as consumers remain uncertain and cautious,” he said.

“The recent announcements of a host of economic measures show the economy is patchy and consumer confidence is still low.

“Many retailers are wishing the Election Day had arrived already, so one way or another, people can move on from the uncertainty that exists when we have a hung parliament.”