Australia’s peak retail body, the Australian Retailers Association, has welcomed the Reserve Bank of Australia’s decision today to hold cash rates at 4.1% for the third consecutive month as inflation continues to plateau.
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 the reprieve in September’s monetary decision, giving the retail industry “cautious optimism” heading into the busiest trading season of the year.
“We’re pleased to see the RBA show restraint once again. The decision to hold interest rates for a third consecutive month will certainly bring relief to Australians, businesses and the retail industry,” Mr Zahra said.
“As we move towards the all-important Christmas trading period, each monetary decision by the RBA will have an important bearing on spending across the country.
“The decision to pause interest rates will help bolster business confidence and provides some 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 since May 2022.
“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.
“It would appear inflation has peaked and is in decline, so the top priority should now be minimising financial stress on Australian mortgage holders and businesses.
Mr Zahra pointed to the latest retail trade data as a bellwether of the discretionary spending slowdown.
“For the second consecutive month, all non-food related retail categories have remained in year-on-year spending decline,” he said.
The ABS last week revealed the monthly consumer price index (CPI) rose 4.9% in the year to July, down from 5.4% the previous month and under market forecasts of 5.2%.