By Swati Pandey and Wayne Cole
SYDNEY, May 7 (Reuters) - Australian retailers posted their weakest quarter in seven years in March in a bad omen for the broader economy as the country's central bank deliberates on whether or not to cut interest rates later on Tuesday.
Figures from the Australian Bureau of Statistics (ABS) out showed retail sales rose a tepid 0.3 percent in March compared with an upwardly revised 0.9 percent in February and forecasts for a 0.2 percent gain in Reuters poll.
For the first quarter as a whole, sales fell 0.1 percent in inflation-adjusted terms for its first negative reading since September quarter of 2012 and followed an already sedate December quarter.
The quarterly decline in volumes was led by household goods and department stores. Cafes, restaurants and takeaways, food retailing, and clothing all ticked higher.
The soft result implies retail sales did not contribute to growth in Australia's A$1.9 trillion economy in the March quarter. It also adds to growing evidence of a rocky outlook, given household spending accounts for around 57 percent of annual gross domestic product.
Consumer spending has been under pressure from record-high household debt, sluggish wage growth and falling house prices, a recipe for the Reserve Bank of Australia (RBA) to lower interest rates.
Calls from some analysts for the RBA to ease policy at its May meeting intensified after first-quarter inflation came in below expectations to undershoot the central bank's 2-3 percent target for 13 straight quarters. 40 percent of economists polled by Reuters in late-April expect the RBA to cut interest rates on Tuesday to an all-time low of 1.25 percent while futures market 0#YIB: imply a 36 percent chance of a cut. RBA decision is due at 0430 GMT.
Other data out on Tuesday showed Australia's commodity exporters enjoying a bonanza from high prices, notably iron ore. The country's trade surplus came in at A$4.9 billion ($3.4 billion) for March, bringing the total for the quarter to a record A$14.74 billion.
The gains are driven more by rising prices than volumes, so net exports will not add significantly to real gross domestic product (GDP) growth.
Yet the many billions in extra dollars earned are a windfall for profits, dividends, share prices and tax receipts.
They provide a major boost to national income and could well lift annual growth in nominal GDP to near 6 percent in the March quarter, likely three times that of inflation-adjusted growth.
The rush of cash to the government is one reason the two main political parties were able to offer generous tax cuts ahead of an election on May 18. ($1 = 1.4286 Australian dollars)