It appears that consumers are spending again as the Australian retail trade turnover rose 0.5 per cent in July 2011, following a 0.1 per cent fall in the previous month.

Reported by the ABS, the positive news was reflected by the rising turnover in other retailing (1.9 per cent), department stores (1.2 per cent), cafes, restaurants and takeaway food services (1.1 per cent) and food retailing (0.8 per cent).

Despite these rises, the Australian Retailers Association (ARA) has described that these July trade figures are “dismal” and show “no sign of a spring break from consumer caution”, particularly given that clothing, footwear and personal accessory retailing fell -4.2 per cent while household goods retailing remained unchanged.

ARA executive director Russell Zimmerman said retail trade figures for July were cause for major concern over discretionary spending, with year on year declines in clothing and footwear (- 7.5 per cent), department stores (- 2.2 per cent) and household goods (- 0.3 per cent).

“While there was an overall growth in sales of 0.5 percent when compared to June and 1.4 per cent when compared to July last year, figures for clothing, household goods and department stores reflect a continuation of the consumer confidence spiral, with households saving rather than spending and struggling to come to terms with the soaring cost of living,” he said.

“Also for the first time this year, sales for the café, restaurant and takeaway category showed a year on year decline, dropping three per cent, which is often a sign of consumers tightening their belts even further as they make an easy saving on a restaurant meal in favour of eating in.”

Additionally, the ABS reported that trend turnover rose 0.1 per cent in July 2011. This follows a rise of 0.1 per cent in June 2011 and a rise of 0.2 per cent in May 2011. Trend turnover rose 1.5 per cent in July 2011 compared with July 2010.

From these latest figures, Zimmerman has urged the Reserve Bank of Australia to be cautious when they announce their course of action next Tuesday and to lower interest rates.

“Retailers know if interest rate action isn’t taken immediately to reduce the burden on their customers’ wallets, they are in great danger of having to cut staff, close stores and contribute to the economic storm brewing through key industries,” he said

“As Australia’s largest employer and a $240 billion dollar player in the country’s economy, the RBA cannot risk interest rates being a reason for the story of a struggling sector to continue for the rest of the year.”