The Reserve Bank of Australia (RBA)'s decision to leave the official cash rate unchanged at 4.5 per cent for the third month will give struggling retailers a glimmer of hope for retail trade recovery.
The Australian Retailers Association (ARA) executive director Russell Zimmerman said retailers who have come off several months of dismal trade – and who now face increased wage bills from the Modern Retail Award – would hope for consumers will regain confidence and grab retail bargains.
"A rate rise amidst the uncertainty of looming Federal elections would have been disastrous,” he said.
“We are receiving pleas from members daily about their plight with most trading below 2009 levels.
"Retail sales across all states and categories have increased only 1.9 per cent from June 2009 to June 2010. This is not real growth – it's well below healthy levels for the sector.”
Australian National Retailers Association (ANRA) CEO Margy Osmond said the sector is still battling to recover from the global financial crisis.
“Retail figures were dismal – only 0.2 per cent increase in a month when there were no interest rate rises and bumper sales, so the reprieve from the RBA is welcomed,” she said.
A retail insight survey by ANRA and partners AMEX examined the impact of interest rate rises on homeowners spending decisions.
“Interest rate rises are front of mind for consumers – in the next six months 47 per cent of the 1000 people surveyed said the cash rate would determine their choices when considering buying goods over $500.
“Despite slashing prices all year, retailers are still seeing low figures. We’ve had two straight months of 0.2 per cent increase and the overall figure for the past 12 months remains at 1.9 per cent, well below normal rates,” she said.
“Australians want security before making major purchasing decisions, they need consistent interest rates so they can make plans for their financial future, so keeping the rate stable is good news for retail, and good news for Australians,” she said.