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RBAs rate relief too late for struggling small retailers rate cut to flow through economy boosting Christmas spend

Peak retail industry body the Australian Retailers Association (ARA) said the Reserve Bank of Australia's (RBA) decision to cut the cash rate by 0.25 points today may be too late for many struggling small retailers. ARA Executive Director Richard Evans said that the cut won't be felt for at least three to four months and damage as already been done for smaller retailers who have borne the brunt of heavy handed monetary policy since late last year.

"The current retail cycle is at its lowest and we hope that today's rate cut will help start the upwards trend for consumer spending after successive months of stagnant and declining growth. It may take up 18 months for the damage caused by rate rises to be reversed and the economy to recover to growth levels similar to late 2007. "We were alarmed early this year by the RBA's knee jerk reaction with successive rate increases and called for a steady hand. The ARA has said all along that the rate increases in November 2007 were yet to be felt through the economy and that the February and March rate increases were premature and damaging - unfortunately our predictions were correct. "Let's hope the RBA has seen the damage and decides to give the economy more relief and cut the cash rate again in October," Evans said. "The retail sector is the barometer of the economy and if it's struggling it's a sure sign times will continue to toughen for the broader economy as ten years of economic sunshine come to an end."Today's decision by the RBA shows it has again responded to retailers and consumers and continued to listen to those battling in this economy and allowing the natural market forces to correct itself. The concern we have is that petrol prices are continuing to place more pressure on grocery prices. This is going to further bite into the already tight purse strings of average Australians and put pressure on retailers as discretionary spend declines," Evans said.

For over 104 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $292 billion retail sector which employs over 1.2 million people. As an incorporated employer body under the Workplace Relations Act and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia. Visit www.retail.org.au or call 1300 368 041.

For interview opportunities with ARA Executive Director Richard Evans contact: Kath Christie, ARA Policy & Media T: 04222 5344 E: kath.christie@retail.org.au

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