By Shivaun Hales

Australian retail sales slipped by 0.1% in December, indicating consumer sentiment remained weak over the Christmas trading period.

In a surprise to analysts, the latest ABS Retail Trade figures revealed the first drop in retail sales for six months, following a rise of 0.1% in November 2011.

Food retailing pulled down sales, with a 0.7% decline in December, while clothing and footwear stores reported a 3.5% rise.

Department stores edged up 1.1%, and household goods retailing experienced a 0.2% lift.

In the December quarter, turnover rose 0.4% in seasonally adjusted volume terms, following a 0.5% rise in the September quarter.

Retail sales in fell in most states, Queensland reported a 1.4% drop, sales were down in WA by 0.7%, NSW -0.2%, SA -0.7%, the NT- 2.6% and Tasmania -0.1%. Turnover rose by 1.5% in Victoria and the ACT experienced a 1.8% lift.

The weak Christmas numbers help the case for a rate cut at tomorrow's RBA board meeting.

AMP Senior Australian Economist Bob Cunneen said the December numbers very disappointing.

"It definitely favours another rate cut by the RBA. The RBA should be able to see consumers are very subdued, which partly reflects global concerns such as Europe but also reflects (the fact that the) labour market is softening here," Cunneen told Fairfax.