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Sixth RBA rate hike to further dampen soft retail spend

Peak retail industry body the Australian Retailers Association (ARA) said the Reserve Bank of Australia’s (RBA) sixth 25 point interest rate rise since October last year was devastating news for retailers who were still struggling to cope with reduced consumer demand.

ARA Deputy Executive Director Jennifer Cromarty said retail trade figures show the sector is struggling to post any strong or consistent trade and instead of the Federal Government and the RBA implementing measures to offer some relief to the small business sector, they’re stifling recovery.

“Retailers are trying hard to get back on their feet and stay there but they are taking hits from all sides at the moment. While they struggle to recover, they are having difficulty accessing finance and the Federal Government is coming at them with increased wage bills and compliance costs for new legislation including tobacco point of sale display restrictions in seven states.

“If trade was strong, retailers may be able to manage these hikes in operational expenses but they are also bearing the brunt of the RBA’s decision to continuously take cash away from consumers with rate hikes.

“The Commonwealth Bank – ACCI Business Expectations Survey released today confirmed small businesses continue to face soft trading conditions and a dreary employment outlook with rate hikes only putting more pressure on retailers grappling with dampened demand.

“The RBA is continuously ignoring pleas from retailers to let rate hikes impact the market fully before they rush like a bull at a gate bombarding consumers with rate rise after rate rise. Consumers need time to properly manage increases to their mortgages without pulling back so much on their spending.

“For mortgage holders, today's rate rise will add about $46 to the average monthly payment for a standard $300,000 home loan. That’s $46 taken out of consumers’ wallets and another reason for them to tighten their belts at a time when retailers are still trying to stimulate consumer spend.

“Retailers are Australia’s largest employers, and while they struggle with limited access to affordable finance as well as wage bill pressures as a result of the modern award, they must have incentive to hold onto staff. Taking cash away from consumers after over a year of patchy retail sales doesn’t encourage employment in the sector,” Cromarty said.

For over 105 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia’s $292 billion retail sector which employs over 1.5 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.

-ends- For interview opportunities with ARA Deputy Executive Director Jennifer Cromarty contact:
Kath Christie, Media and Policy T: 0422 293 544 E: media@retail.org.au

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