By Rishav Chatterjee and Kumar Tanishk

Jan 30 (Reuters) - Australian discretionary retailers hit a record for the third straight session on Thursday, after cooling inflation data raised hopes of an interest rate cut as early as next month, which could spur spending on non-essential items.

The S&P ASX 200 Consumer Discretionary .AXDJ sub-index gained as much as 1.6% on Thursday. The sub-index also hit records on Tuesday and Wednesday.

Analysts expect Australian discretionary retailers to benefit from interest rate cuts in 2025, giving shoppers more money to spend on items such as electronics and footwear.

Data on Wednesday showed that consumer prices rose at the slowest pace in nearly four years in the last three months of 2024 while easing home prices helped cool core inflation, opening the door for the Reserve Bank of Australia to lower borrowing costs as soon as February.

The country's four big banks, Commonwealth Bank of Australia CBA.AX, National Australia Bank NAB.AX, Westpac WBC.AX and ANZ ANZ.AX, all expect interest rate cuts to begin next month.

"Expectations of a February cut have boosted the local market, and in particular more rate-sensitive stocks across the tech and consumer discretionary sectors," said Stella Ong, market analyst at share trading platform Superhero.

Lower rates and taxes are likely to give consumers more confidence to spend after they cut back on non-essential spending over the last two years amid a cost-of-living crisis.

"The setup for the consumer in 2025 is more constructive, with tax and rate cuts expected to relieve some of the cumulative pressures that have weighed on household budgets, supportive of a return to normalised spending growth," equity analysts at Morgan Stanley said in a research note.

The sub-index was lifted on Thursday by heavyweights including the country's top conglomerate Wesfarmers WES.AX, whose businesses include retailers Target and Kmart, which added 1%. Gaming firm Aristocrat Leisure ALL.AX was up 3.5%.

Morgan Stanley was positive on Kmart as well as Wesfarmers' hardware chain Bunnings.

Electronics retailer Harvey Norman HVN.AX and quick-service restaurant chain Guzman y Gomez GYG.AX also advanced, gaining 1.5% each on Thursday.

(Reporting by Rishav Chatterjee in Bengaluru; Editing by Kate Mayberry)

((Rishav.Chatterjee@thomsonreuters.com;))