The Australian Retailers Association (ARA) has described the Reserve Bank of Australia’s decision to hold interest rates at 4.5 per cent on 6 October as recognition of a less than rosy outlook for the Australian economy.
Flat retail trade along with political uncertainty, concerns about the global economy and a general lowering of business and consumer confidence was affecting Australia’s economic outlook, the peak industry body confirmed.
ARA executive director Russell Zimmerman said the body was asking “that the RBA ‘give Christmas a chance’ this year to help struggling retailers claw back revenue and lift consumer confidence by keeping rates on hold in 2010.”
“Fashion retailers are suffering heavily as they have all year and are hoping for a stronger period of growth leading into the vital Christmas trading period in from mid November.”
This time last year, the RBA “broke retailers’ hearts” with several rate rises leading into the Christmas trade period. Meanwhile current concerns continued to affect retail this year.
“The apprehension consumers have had to spend in retail during political uncertainty in July and August has proven correct. In addition, the ARA Consumer Spending Confidence report (surveying over 1000 consumers in August) showed Australians still weren’t confident in the economy and a rise in the cash rate would have a signalled 35 per cent of consumers reducing their spend on basic apparel and shoes; a further 38 per cent cutting back on luxury clothing; 45 per cent cutting back on dining out and entertainment; and one third of consumers reducing their spend on bigger items including white goods, furniture and home furnishings.”
The August retail trade figures confirmed “the end of a very soft winter for retailers, with cafes and restaurants still propping up the sector,” Zimmerman said.
“When we look at year-on-year growth, August trade is up 3.8 per cent from the same time in 2009 but this is also propped up by cafés, restaurants and takeaways up 15.1 per cent from last year,” Zimmerman said.