Australia’s peak retail body, the Australian Retailers Association (ARA), has welcomed the Reserve Bank of Australia’s (RBA) decision today to hold cash rates at 4.1% for the fourth consecutive month, giving the retail industry much needed reprieve heading into the all-important Christmas trading period.
The decision comes after the latest Australian Bureau of Statistics retail trade data revealed most categories remain in decline amid a discretionary spending slowdown due to cost-of-living pressures.
ARA CEO Paul Zahra welcomed October’s monetary decision, which gives the retail industry “cautious optimism” heading into the busiest trading season of the year.
“We’re pleased to see the RBA show restraint for a fourth consecutive month. The decision to hold interest rates again will certainly be a relief to Australian homeowners, businesses, and the retail industry,” Mr Zahra said.
“Retailers have turned their attention towards setting up for the festive season and so too are consumers beginning to think about Christmas gifts for their loved ones. At a time of immense financial pressure and hardship for some– avoiding another cash rate increase will have a positive impact on spending and retail preparations.
“Christmas and the holiday season are when discretionary retailers make up to two-thirds of their profits and hence, retailers need confidence to be able to invest in jobs during this time.
“The decision to pause interest rates will help bolster business confidence and again provides cautious optimism that they may have peaked.”
ARA CEO Paul Zahra said the retail industry – particularly small business – is still reeling after 12 interest rate hikes between May 2022 and June 2023.
“Continued interest rate hikes have the dual effect of reducing customer spending whilst also increasing business costs – during a time where the industry is already under enormous pressure,” Mr Zahra said.
Mr Zahra said consecutive months of retail trade data have demonstrated that the discretionary spending has significantly slowed.
“With the exception of food spending mainly driven by unavoidable price increases, all other categories of retail are either in decline or trending towards decline,” Mr Zahra added.