By Shivaun Hales

Retail sales may be on the way up, with the Commonwealth Bank’s Business Sales Indicator (BSI) increasing by 0.6% in trend terms in January, after 0.7% gains in November and December.

The BSI, which tracks the value of credit and debit card transactions processed through the Commonwealth Bank’s point-of-sale terminals, recorded a spending increase in all states for the fourth consecutive month.

CommSec chief economist Craig James said the sales increase justifies the Reserve Bank of Australia’s decision to hold interest rates.

“Despite ongoing economic concerns being felt both here and overseas, sales figures are ticking up and have been for some time now,” said James.

“The results align with the Reserve Bank’s view that activity in the services sector has generally proved stronger than physical goods sales,” he said.

James said retailers were continuing to enjoy sales growth expected for the start of the year.

‘‘However, we will need to see ongoing improvements in consumer confidence for that trend to continue and for the associated benefits to be felt by a larger number of businesses,” James added.

CBA local business banking executive GM Matt Comyn said consumer confidence is slowly returning.

"While the improvements are a good sign, there are a range of factors that contribute to consumer confidence; the ongoing fluctuations we are seeing in the global economy, therefore, make it difficult to forecast how strong the recovery will be," he said.