Australia's producer price index ( PPI) at the final stage of production fell 0.3 percent in the March quarter, following a 0.3 percent rise in the December quarter, data released on Monday by the Australian Bureau of Statistics (ABS) showed.

Over the year to the March quarter 2012, the PPI at the final stage of production rose 1.4 percent, the ABS said.

In the March quarter, at the intermediate stage, the PPI rose 0. 3 percent, while at the preliminary stage it rose 0.1 percent.

Through the year to the March quarter, the PPI at the intermediate stage rose 2.8 percent and at the preliminary stage it was up 3.4 percent, the ABS said.

Economists had forecast a 0.5 percent rise in the March quarter PPI.

The fall in producer prices in the March quarter indicated a possible cash rate cut in May by the Reserve Bank of Australia ( RBA), economists said.

"The bottom line is, will inflation be low enough to see the RBA cutting rates next week, and we see the PPI as evidence that it's likely," Global banking giant HSBC chief economist Paul Bloxham told the Australian Associated Press.

Australia's financial services firm CommSec economist Savanth Sebastian also said the weak PPI data was another step in the direction of a rate cut in May.