SYDNEY, May 26 Reuters Australian retail sales were flat in April as consumers, who face high living costs and rising interest rates, cut back spending on food and dining out, bolstering the case for a pause in rate hikes next month.

Data from the Australian Bureau of Statistics ABS on Friday showed retail sales were unchanged in April from March, when they rose 0.4. Analysts had looked for 0.2 growth.

Sales of A35.26 billion 23.92 billion were up 4.2 from a year earlier, slowing from the 5.4 growth in March.

While shoppers spent more on winter clothes and in department stores, they curbed spending on food and dining out, which registered declines of 0.1 and 0.2 respectively. Household goods fell 1.

The slowdown in consumer spending is evidence that a whopping 375 basispoint tightening by the Reserve Bank of Australia since May is having the desired effect of cooling demand.

Retail turnover has plateaued over the last six months as consumers spent less on discretionary goods in response to costofliving pressures and rising interest rates, said Ben Dorber, ABS head of retail statistics.

Retail sales volumes had already posted a fall in the first quarter, marking a second straight quarterly decline and indicating a drag on economic growth.

However, the central bank has warned that more rate rises might be required, citing upside risks to the inflation outlook, and this has prompted markets to price in the chance of another hike in August or September and a scenario…