It says the move will give retailers some much-needed breathing space warning rate stability is necessary to keep the industry rolling.
Executive director Gary Black has urged the RBA to hold off on any increase for the rest of the year.
The decision to hold rates at 4.75 per cent comes after retail trade figures were released yesterday by the Australian Bureau of Statistics (ABS)
showing a drop of 0.6 per cent in turnover for May 2011, the worst fall since October last year.
“This is what we had hoped for and although it is what we were expecting we’re still extremely pleased and relieved,” Black says.
“It was really the only option that could give those in the retail industry any optimism. At the moment our situation is highly volatile as can be seen by comparing April’s figures with May’s figures and a rates rise now would have been disastrous for us.
“Consumers are continuing to be frugal with their purchases, so we need rates stability to build confidence so people will start spending again. Although the essential sectors such as food saw growth even in May, the industry will continue in the slump it’s been in for over a year if rates rise in 2011.”
“Already wary consumers pulled back on their spending in a big way throughout May, confirming retailers’ fears that the slight growth in April was only temporary and not a realistic reflection of the pressure being felt in the sector,” says executive director Russell Zimmerman.
“Anecdotal evidence of weaker than usual mid-year sales further shows any interest rate rise would have been disastrous for retailers. The RBA’s steady hand on the cash rate is a job well done.
“Retail sales are already in dangerous territory and now consumers are taking a ‘wait and see’ approach to how new budget items including taxes and carbon pricing will affect their discretionary income.
“The RBA pointed to continued expansion in the global economy with varied rates of growth across industries – retailers are only too aware of this, with their own industry dealing with cautious household spending and a higher cost of utilities as well as the cost of running a retail business and rents being among the highest in the world.”