SYDNEY, June 4 (Reuters) - Australia's current account unexpectedly swung into deficit in the March quarter as imports jumped and prices for commodity exports fell, a sharp turnaround that will take a chunk out of gross domestic product (GDP).

Yet, other data out on Tuesday showed businesses re-built inventories at a surprisingly fast pace in the quarter, while government spending also added to growth.

Inventories alone look to have added a full percentage point to GDP, helping offset a large 0.9 percentage point drag from net exports.

The economy still likely limped along in the quarter, however, with analysts tipping growth of perhaps 0.2%. Annual growth was seen braking to just 1.2%, the lowest since early 2021 when the economy was reeling from the pandemic.

The slowdown has been largely engineered by the Reserve Bank of Australia (RBA) which hiked interest rates to a 12-year high of 4.35% in an effort to curb demand and restrain inflation.

The toll has been particularly hard on household consumption such that financial markets assume rates are unlikely to rise any further, though they also see little chance of an easing until April next year.

The figures on Australia's current account position contained some major surprises, showing a deficit of A$4.9 billion ($3.27 billion) in the first quarter, when analysts had looked for a surplus of A$5.1 billion.

The previous quarter's surplus was also revised down sharply to A$2.7 billion, from an initially reported A$11.8 billion, largely due to new data showing Australians had spent more on overseas travel than previously assumed.

On the upside, Australia's international investment position improved markedly in the first quarter as holdings of foreign equities, mainly by pension funds, surged by A$132 billion to a record A$506 billion.

"This reflected a large rise in Australia's foreign equity assets as Australian investors benefited from rising values in international share markets," noted Grace Kim, ABS head of international statistics. ($1 = 1.4970 Australian dollars) (Reporting by Wayne Cole; Editing by Jacqueline Wong & Shri Navaratnam)