Consumer sentiment across Australians has seen an increase of two per cent for March, according to the Westpac Melbourne Institute Index of Consumer Sentiment report released this week (March 13).

This is a positive indicator for retailers in Australia, as it shows that consumers are beginning to feel better about spending money.

The report has shown that the figures for March are 110.5 – which is two per cent higher than February’s figure of 108.3.

This is the highest the index level has been since December 2010, and it is also up by 15.1 per cent over the last 12 months.

A contributing factor to the increase in consumer sentiment may be the lowering of the cash rate in the past few months – with Westpac Melbourne stating that the accumulation of the cuts has appeared to be genuinely boosting customer confidence.

Chief executive of the Australian National Retailers Association Margy Osmond stated: “The increase in sentiment is welcome and we hope it indicates the Reserve Bank of Australia’s moves to lower the cash rate are starting to have an impact on Aussie family budgets. However, it appears households are still choosing the bank as the best place to put their money.”

Results from the report have also shown that there are fewer people wanting to pay down their debt – with the figures decreasing from 22.7 per cent this time last year, to 18 per cent. Ms Osmond has noted that this indicates that people are becoming more comfortable with having debt and may move to spend again.

Retailing in Australia may potentially see the benefits of this boost in sentiment in the coming months, however Ms Osmond states that retailers should remain cautious.

“Despite a good start to the year with January retail figures up 0.9 per cent etailers will remain cautiously optimistic about the prospect of recovery in 2013. However, there are some good signs in today’s confidence figures to indicate sentiment might not be all that counts, but it’s a step in the right direction for the sector,” said Ms Osmond.