Retail spending rose 0.3 per cent in March, beating market expectations, though a drop in quarterly sales volumes has bolstered the case for a rate cut.

Seasonally adjusted retail spending rose to $27.37 billion and followed a rise of 0.9 per cent in February, according to Australian Bureau of Statistics data released on Tuesday.

The result was slightly up on the consensus forecast of a 0.2 per cent rise as strong food prices helped cafes, restaurants and takeaway food services jump by 1.4 per cent.

Spending on clothing, footwear and personal accessories rose 1.2 per cent and household goods retailing also rose 0.2 per cent, offset by a 1.5 per cent decline at department stores.

WA was the only state to record a decline in seasonally adjusted retail spending, down 0.7 per cent for March, while Victoria led the nation with a 0.7 per cent monthly rise.

However, Tuesday’s update also showed a 0.1 per cent seasonally adjusted drop in retail sales volumes for the March quarter.

NAB economist Kaixin Owyong said the first volume decline since 2012 pointed to another weak quarter of total consumption and bolstered the case for a near-term rate cut.

“This reinforces our view that the RBA will have to downgrade its outlook for growth given consumer spending makes up around 55 per cent of GDP,” Ms Owyong said.

The RBA will announce its decision on the cash rate at 1430 AEST on Tuesday.

Observers expect a rate cut soon after inflation slowed to zero in the March quarter but futures suggest the RBA may not move this month.

The Australian dollar lifted back above 70 US cents shortly after the release of the retail data even after parallel reports of a four per cent decline in the trade surplus for March.