Retailers will feel the brunt of the fourth 25 point interest rate rise since October last year, taking the cash rate to four per cent after an unhealthy post-Christmas sales season.
Australian Retailers Association (ARA) executive director Russell Zimmerman said retailers felt let down by the Reserve Bank of Australia's (RBA) decision to take cash away from Australian home owners after a slow post-Christmas sales period and just after what is traditionally the toughest month for consumers and retailers alike.
"February is always a hard time for families dealing with back to school costs as well as credit card bills from Christmas and an interest rate rise immediately after this time will now further add to this pressure," said Zimmerman.
"Over 63 per cent of recently surveyed retailers said the Christmas and post-Christmas sales seasons they've just experienced were worse than the previous year, indicating a pull back from consumers after successive interest rate rises at the end of 2009.
"After only a fair Christmas and what appears to be a soft post-Christmas sales period, retailers are now entering their toughest month of the year with yet another blow to  consumers' pockets.
Retailers also have wage bill pressures from the Modern Retail Award changes from 1 July and the minimum wage setting decision is expected to further add to this pressure. Retailers are warning the RBA to take a cautionary approach to future interest rate decisions that have a direct and real impact on retailers who are trying to hold onto staff.
"Retailers are one of Australia's largest employers, and with so many upcoming wage bill pressures, they must have incentive to hold onto staff. Taking cash away from consumers after a year of patchy retail sales and a restrained holiday sales period doesn't encourage employment in the sector," said Zimmerman.