Retail sales figures have come in stronger than expected, giving the Reserve Bank of Australia confidence that the current record-low cash rate is supporting economic recovery.
Australian retail spending rose 0.7 per cent in November, the Australian Bureau of Statistics said on Thursday, beating economists' expectations of a 0.4 per cent rise.
Total retail spending was $22.459 billion in November, up from $22.305 billion in October.
It was the seventh consecutive monthly rise for retail sales and comes after three months of solid results, National Australia Bank senior economist Spiros Papadopoulos said.
"This provides more evidence that the consumer sectors are improving," Mr Papadopoulos said.
"This will make the RBA more confident that they've cut policy enough to support recovery."
Mr Papadopoulos said it was still a long way before a possible cash rate rise from 2.5 per cent, with stronger employment numbers required before monetary policy settings are tightened.
RBC Capital Markets senior economist Su-Lin Ong said the retail spending figures had now beaten expectations for the fourth consecutive month.
"It has definitely picked up momentum in the past few months," she said.
"If you look at the details, there was broad-based strength, with the exception of department stores, which got a bit of a drop.
"Pretty much all the other discretionary spending components like cafes, restaurants and takeaways were all pretty strong."
"You'd have to say that, going into the end of the year, lower interest rates are finally having some sort of impact on consumers, confidence is stronger and asset prices are higher, and that all seems to be feeding into a pretty favourable combination."
Ms Ong doesn't expect the Reserve Bank of Australia to cut the cash rate in the coming months.
"It think that the RBA continues to welcome that low interest rates are having an impact and I think you can see that in some of the interest rate sensitive areas of economy," she said.
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