News: WOW Australia retail prices nearly flat in Q1, trade deficit narrows

• Retail prices barely rise in Q1, reflects subdued inflation
• Sales growth picks up in March, moderate over Q1
• Trade deficit narrows as iron ore, gold exports climb

Australian retail sales grew only modestly last quarter as fierce competition kept prices rises to a minimum, one reason the Reserve Bank of Australia (RBA) cut interest rates this week.

Official data released on Thursday showed retail price inflation slowed to a mere 0.1 percent in the three months to March, the slowest since late 2014.

The RBA cited unexpectedly low inflation when it reduced the cash rate by a quarter percentage point to an all-time low of 1.75 percent on Tuesday.

Retail sales rose 0.4 percent in March, from February when they increased by 0.1 percent. Sales for the first quarter climbed 0.5 percent when adjusted for inflation, which remained subdued across almost all retail sectors.

Food prices were flat in the quarter, the lowest reading in three years, as discount wars raged between the country's major supermarkets Woolworths (WOW) and Coles (WES) and interloper Aldi .

"Overall the Q1 result shows real retail sales continue to track a subdued trend," said Matthew Hassan, economist at Westpac.

Other data from the Australian Bureau of Statistics showed the country's trade deficit narrowed sharply to A$2.2 billion in March - the smallest in a year - from a downwardly revised A$3.0 billion in February.

The improvement was driven by a 4 percent rise in exports, thanks mainly to a 58 percent jump in gold and an 8 percent increase in iron ore.

Exports to China were up 6 percent on March last year even though prices for key commodities such as iron ore were weaker, suggesting volumes were strong despite worries about slower Chinese growth.

"March's Australian international trade and retail sales data suggest that a boost to GDP growth from net trade probably more than offset an easing in consumption growth in the first quarter," said Kate Hickie, assistant economist at Capital Economics.

"We estimate that real GDP growth accelerated from the fourth quarter's 0.6 percent to about 0.8 percent."