The folk at the Reserve Bank board meeting tomorrow can settle back in their seats around the boardroom table and ask fellow director, Roger Corbett if there are any bargains at his former employer Woolies after retail sales fell in April, continuing the slide in activity that started late last year.

Even though the bank is anxious about inflation and the lads from TD Securities tried to whip a ‘inflation shock looms’ story with their latest handy inflation gauge, prepared with the Melbourne Institute, it’s the retail trade figures which are showing the extent of the slowdown in domestic economic activity.

And one welcomed by the RBA, and no doubt everyone paying high interest rates, because it means rates won’t be moved at tomorrow’s meeting. Along with the building approvals figures for April, due out tomorrow as the RBA board meets, there’s every sign the slide in consumption is accelerating, despite the higher inflation.

The retail figures were a surprise to analysts who had been forecasting a rise of 0.2%. The extent of the revisions for March and February also surprised and it is now clear the overall direction of retailing trading at the moment is down, matching the slide in consumer sentiment to a 17 year low.

And while some analysts will quibble about the fact that Easter fell early, the figures show quite clearly that retail activity is slowing: this backs up the sharp slowdown in the growth of personal credit in April in last Friday’s figures from the RBA.

Housing credit growth is slowing and will probably slow even further, if recent building approvals figures are any guide. The Australian Bureau of Statistics said this morning that the seasonally adjusted estimate of turnover for the Australian Retail and Hospitality/Services series fell 0.2% in April 2008.

“This follows a revised increase of 0.2% in March 2008 (0.5% rise originally and blamed, in part on Easter falling early) and a decrease of -0.1% in February 2008 (a rise of 0.1%).

The ABS said the sectors of retailing that did worse were: Food retailing (-1.1% seasonally adjusted), Recreational good retailing (-1.2%) and Other retailing (-0.7%). But Department stores rose, up 1.9%, Clothing and soft good retailing were up 2.9% and Household good retailing had a small increase of 0.4% in the seasonally adjusted estimate.

January, February and now April saw falls, while March was a rise of 0.2%. In trend terms the growth has stopped completely for the past two months.

Meanwhile TD Securities said that its Melbourne Institute monthly inflation gauge showed headline inflation rose 4.5% in the year to May, compared to a rate for the year to April of 4.3%. Although an increase, that isn’t above the expectations that the RBA has of where inflation currently is.

TD Securities said the latest figure “marks the fourth month where year ended inflation has been above 4%, having accelerated from a recent low of 2.6% in May and June 2007.