Interest rates have increased quarter of one per cent - the first rise of this year will add about 50-dollars to the average mortgage.

Economists say it was a line-ball decision as to whether the Reserve Bank would raise interest rates today.

But a slew of positive economic news encouraged the RBA to lift the official cash rate by quarter of one per cent - the first hike of the year.

The decision was driven by healthy company profits, surging house prices and a low jobless rate.

The increase means home buyers will have to fork out an extra 50-dollars a month on the average 300-thousand-dollar home loan.

Today's rate rise comes as new retail figures show consumers splurged 20-billion-dollars in January on food, cloths and household items.

But building approvals slumped 7 per cent as the government's first-home buyers grant was reduced from 21-thousand to 7-thousand-dollars.