The Australian Retailers Association (ARA) said the ABS Consumer Price Index (CPI) figures released yesterday indicate inflation over the past year has been driven by increases in supply channel costs.

ARA executive director Richard Evans said the CPI annual rise of five per cent through the year to September quarter 2008 must be looked at in the context of supply channel driven inflation.

“Inflation this year is not about consumer demand. Increases in the supply channel costs have been driving price increases. The past interest rate rises imposed by the RBA have wilted consumer sentiment to the lowest since 1992 and this has had a negative impact on retailers.
“Prices are not the issue at the moment, it’s consumers not spending that is the problem. When the retail sector is suffering, business will dry up right through the supply channel and this means the entire economy will start to be affected.

Evans said that we need to boost consumer confidence because if consumers stop spending jobs will be lost.

“There are extended sales now so consumers have a great opportunity to take advantage of some really good deals.

“With Christmas just around the corner and the Rudd Government offering some relief with the recent stimulus package, now is the time for consumers to feel confident to spend responsibly and inject dollars back into the economy to flow right through the supply chain,” said Evans.