Consumer sentiment in January has increased slightly, reflecting a possible positive outlook for the year.

The Westpac Melbourne Institute Index of Consumer Sentiment rose by 0.6 per cent in January to 100.6 to 100.0 in December. This is the third consecutive month when the index has been at or above the 100 level.

Australian National Retailers Association (ANRA) CEO Margy Osmond said the increase can be taken as a positive for the retail sector.

“Traditionally the first quarter of the year is slow in retailing, so a positive number in sentiment is welcomed. Along with a higher number of optimists, the almost 5 per cent increase in ‘a good time to buy a major household item’ will resonate with retailing,” she said.

“The sector considers interest in and confidence to buy a major item a strong suggestion of a good month in retailing. In recent months we have seen consumers happy to buy a little treat – a lipstick, dinner out, a book – but it’s when they feel confident to make a major retail investment like a new couch that signals real confidence to spend.”

However, commentary on the results by Westpac chief economist Bill Evans was less optimistic.

“It remains disappointing that despite a total of 175 bp's of rate cuts from the Reserve Bank since October 2011 the Index is only 3.5 per cent above its level at that time,” he said.

Retailers will continue to be looking for at least one more rate cut this quarter when the Reserve Bank meets on February.

“Westpac has not changed its rate view since May last year. We have expected that there is a clear case for at least one more rate cut in this cycle and our target has been the February/March ‘window’,” Evans said.