The Reserve Bank of Australia is in a position to give the Australian retail sector the Christmas present it’s been asking for, a cash rate cut next week, according to the Australian National Retailers Association (ANRA) . The comments come after the Australian Bureau of Statistics (ABS) released consumer price index (CPI) for the September quarter, showing a slow in inflation.

The CPI, the key measure of inflation, rose by 0.6 per cent in Australia in the September quarter, for an annual inflation rate of 3.5 per cent, the ABS said on Wednesday.
According to JP Morgan economist Ben Jarman, traders sold off their Australian dollars on speculation that the lower than expected core CPI figures added to the case for possible cuts to the cash rate by the Reserve Bank of Australia (RBA).

"It certainly means the RBA's got more scope to ease policy, if things get worse offshore,” he said.

ANRA CEO Margy Osmond explained RBA now has the chance to play Santa to the retail sector.

“Retail has been doing it tough in 2011 and this coming holiday period it is vital there is a lift in sales from last year. In November 2010 the RBA effectively put in place the rate rise that stopped a nation’s Christmas – this year we need to see the reverse.

“The September quarter inflation outcome appears much weaker than expected and there is room for a 25 basis point cut to the cash rate.

“Of course retailers would hope the banks would then pass that rate cut on in full so Australians can reap the benefits,” Mrs Osmond said.