Consumer spending has fallen for the first time in almost ten years, according to the SA Reserve Bank's December Quarterly Bulletin published on Tuesday.

"Real final consumption expenditure by households declined at an annualised rate of 0,8 per cent in the third quarter of 2008.

"This was the first contraction since the fourth quarter of 1998," the bank said.

The data will allow space for the bank to cut interest rates this week.

"Yes, the consumer spending data allows room for a cut," said T-SEC economist Mike Schussler.

"We're getting a clear idea that the economy is continuing to slow down -- and I think the bank will cut the repo rate by 50 basis points," Schussler said.

"The bank will start off mildly when cutting rates -- but the cuts could get bigger later on.

"Governor Mboweni is a bit concerned about the effects of cuts on the rand -- and this is something he's also made clear in the Quarterly Bulletin," Schussler said.

The bank has increased the repo rate six times since the middle of 2007, causing consumers to curb spending but also causing the country's economic growth to slow.