Retailers’ hopes were left shattered when the Reserve Bank announced it was keeping the cash rate at 4.25 per cent.
But now there are expectations that the RBA will provide an interest rate cut next month after it denied them of a much needed opportunity to recover from a poor December period.
National Retail Association executive director Gary Black said the Christmas data confirmed the continuation of the very difficult trading environment that retailers have experienced over the last two years
“This announcement by the RBA will disappoint retailers relying on a boost to consumer spending, and a better 2012. A rate cut would have been just what they needed,” he said.
Recent retail trade figures show the key discretionary categories – household goods, clothing and footwear and department stores – are struggling to get out of negative growth and trading conditions remain extremely difficult.
Meanwhile, the Australian Retailers Association (ARA) has lashed out saying the RBA’s decision has created the perfect storm for job losses amid declining retail trade and increased cost of living including mortgage stress.
ARA executive director Russell Zimmerman said the RBA’s decision was a shocking blow for retailers at a time when there was a desperate need to stimulate consumer spending and save jobs in the industry that employs over 1.2 million Australians.
“Something has to give for retailers. If we don’t see some positive trade soon, jobs will be lost and more stores will be forced to close their doors,” he said.
“Retailers are clearly bearing the burden of weak consumer sentiment on behalf of the rest of the economy, and with consumers heading into February which is always the toughest time for retailers as credit card bills roll in from Christmas and back to school costs keep household budgets tight.”
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