The Australian Retailers Association (ARA) said the Reserve Bank of Australia’s (RBA) decision to cut the cash rate by 0.25 points 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.

“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.

“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 10 years of economic sunshine come to an end,” he said.

While Evans has welcomed the rate cut, he is however still concerned about the high petrol prices putting pressure on retailers.

"The 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."