Retailers have welcomed the Reserve Bank of Australia’s decision to slash the interest rates to 4.1 per cent, but said they have yet to see any momentum to restore confidence in the sector.

“The Reserve Bank’s decision to cut the cash rate to 4.10 per cent is a step in the right direction,” said Fleur Brown, chief industry affairs officer Australian Retailers Association (ARA).

“This should provide modest relief to households, helping restore spending confidence and set a more optimistic tone for 2025.”

Lindsay Carroll, interim CEO of the National Retail Association (NRA), said that to thrive, the $430 billion retail sector needs to focused policy making on areas such as combatting retail crime, bolstering supply chain resilience, and strengthening support for small businesses.

“The rate cut is a great start, but with a federal budget and election around the corner, retailers are looking for signals around sustainable economic growth,” said Carroll.

Earlier, the Australian Bureau of Statistics (ABS) said that retail sales improved 4.6 per cent year over year $36.99 billion in December.

Among all categories, household goods saw the highest growth rate of 7.1 per cent as sales totalled $6.14 billion.

Simon Baptist, principal economist for Visa Asia Pacific, said that “consumer sentiment remains fragile with a lot of people saying their financial situation is worse compared to last year”.

Baptist added: “Aussie households will welcome this rate cut as it will help return their finances to a sustainable trajectory.”

Isaac Gross, lecturer at the Monash Business School’s Department of Economics, commended the RBA’s move and expressed optimism on further rate cuts.

“The RBA was right to cut interest rates today in the face of the low inflation data that comes out in January,” said Gross.

“The RBA will continue to cut slowly over the course of 2025 as and when the economic data comes out. If they get back to their natural rate this means three interest rate cuts will be delivered over the coming months.”