Australian retail sales unexpectedly fell in April

Retail sales in Australia unexpectedly dropped in April after three months of growth. This prompted traders to revise forecasts of interest rate cuts by the Reserve Bank of Australia this year, Bloomberg says.

The Australian Bureau of Statistics reports that April retail sales fell by 0.1% from a month earlier, driven by a decline in clothing purchases. Analysts had projected a 0.3% increase. 

The result added to expectations of more monetary easing by the Reserve Bank of Australia. Traders price in three more reductions in borrowing costs this year, Bloomberg says. Prior to the release, market participants were projecting two rate cuts. 

Weaker retail sales indicate that Australian households are cautious in the face of global uncertainty, according to experts at Oxford Economics. They believe unless consumption rises in the coming months, the Australian central bank may cut rates sooner than expected.

Retail sales could be important in determining monetary policy, as consumption accounts for more than half of the country's GDP, Bloomberg adds.