-- Retail sales slide in April; consumers downbeat

-- Data add to pressure on RBA to cut rates Tuesday

-- Many pressures on traditional retailers

By James Glynn

Of Dow Jones NEWSWIRES

SYDNEY -(Dow Jones)- Australian retail sales fell for the first time in almost a year in April, adding to concerns the economy has slowed sharply and signalling that more interest-rate cuts may be required to return consumers to stores.

Retail sales fell 0.2% to a seasonally adjusted A$21.2 billion (US$20.7 billion), the first decline since June, the Australian Bureau of Statistics said Wednesday. Economists had forecast a rise of 0.2%.

Sales of household goods fell 0.8%, while sales at department stores fell 1.0%, and clothing and footwear and personal accessory sales dipped 0.1%. But strength remained in such areas as spending in cafes and restaurants.

The Australian dollar fell sharply on the data, dropping as low as US$0.9776 from US$0.9820 just ahead of the report. At 0410 GMT, the currency was trading at US$0.9792.

Weak consumer demand complicates the government's commitment to return Australia's budget to a narrow surplus by the end of the new fiscal year. It will also add to pressure on the Reserve Bank of Australia to cut rates Tuesday.

The RBA eased by 50 basis points in early May, its biggest cut since the global financial crisis of 2008-09. Financial markets are expecting the RBA to continue cutting from next week. And with storm clouds from Europe growing and doubts about growth in China rising, pressure for another cut is on the rise.

"The Reserve Bank Board must have a rate-cut proposal on the agenda at next week's meeting," said Craig James, chief economist at CommSec brokerage.

Australia has enjoyed a huge mining boom, largely to fuel China's heady growth, but weak consumer demand has held back growth in the A$1.4 trillion economy since the financial crisis. The RBA's efforts to resuscitate it since November with rate cuts largely appear to have failed.

Traditional brick-and-mortar retailers are under pressure with household savings at their highest level in a quarter of a century. And even though online sales are up 15.5% in the last year, outpacing the 4.1% gain for traditional retail in a National Australia Bank survey, a hefty chunk of the online sales are going to overseas websites, spurred by the Australian dollar, which remains high despite a 10% drop since early February.

Australia's two-speed economy is also playing a role in shaping shopping trends. Sales growth in the mining-rich state of Western Australia remains far above that in any other state. Still, most of the country's population is in the east where economic activity has slowed to a crawl.

Joshua Williamson, an economist at Citigroup, said he does not expect any meaningful recovery in consumer demand, even as the government hands out compensation payments in coming weeks to coincide with the mid-year introduction of a carbon tax.

"High-frequency news about job losses at major Australian companies and European woes dragging share markets down is entrenching a save-now, buy-later mind-set," he said.

-By James Glynn, Dow Jones Newswires; 61-2-8272-4685; james.glynn@dowjones.com