The Australian dollar tumbled on Wednesday after data showed retail sales fell surprisingly in February, leaving analysts divided on forecast weather RBA would lift interest rates next week.

Figures released by the Australian Bureau of Statistics showed that retail turnover slipped more than expected 1.4 per cent in February as compared with an increase of 1.1 per cent in January.

Volume of retail sales dropped from $20.12 billion in January to settle at $19.83 billion in February.

The figure for February was much weaker than analysts’ forecasts of 0.2 per cent rise.

After the release of data, Australian dollar fell from $0.9204 to $0.9143.

Figures also showed that total number of residential building approvals dropped 3.3 per cent in February after falling 5.5 per cent in the previous month.

Stephen Roberts, chief economist at Nomura, is of the view that the latest figures would compel the RBA to leave its cash rate target unchanged at 4.0 per cent.

But, Brian Redican from Macquarie Bank argue big increases in iron ore and coal prices will encourage the central bank to hike rate from 4.0 per cent to 4.25 per cent when it takes decision next week.