Australian Bureau of Statistics (ABS) retail trade figures released today show a 0.3 per cent growth in March sales as a result of an early Easter four day break.
However, the Australian Retailers Association (ARA) warned retail growth wouldn't persist if interest rates continued to rise.
ARA deputy executive director Jennifer Cromarty said the early falling of Easter this year kept March sales afloat in what could have otherwise been another soft month of trade.
"Retailers will welcome the slight growth in sales after over 18 months of patchy and trivial growth and especially after the 1.2 per cent decline in February sales,” she said.
“However, retailers are still desperate for a few months of consistent and significant growth, which won't happen if consumers are continuously adjusting their spend to cope with mortgage increases.
"March retail trade was affected by a number of environmental and social factors. On the one hand we have warmer weather dampening consumer demand for early releases of winter stock, but on the other hand the four day Easter break has bumped up consumer spend.
"The four day Easter break is a significant trading period for retailers as consumers catch up on chores they've been delaying, be it DIY home improvements or restocking empty wardrobes. If the weather is bad this trade can traditionally increase, particularly for retailers operating in shopping centres, with consumers looking for indoor activities on their four day holiday.
"NSW retailers who reported stronger than usual trade over the Easter break due to the rainy weather have reported 1.2 per cent trade growth over the month of March," said Cromarty.
The Australian Capital Territory (1.3 per cent) recorded the largest rise in sales in March, followed by New South Wales (1.2 per cent), the Northern Territory (0.9 per cent), South Australia (0.5 per cent) and Western Australia (0.4 per cent). Sales fell in Tasmania (-1 per cent), Queensland (-0.5 per cent) and Victoria (-0.1 per cent).
Sales rose, in seasonally adjusted terms, across five retail industry groups including clothing, footwear and other personal accessory retailing (1.4 per cent), department stores (1.1 per cent), other retailing (0.9 per cent), cafes, restaurants and takeaway food services (0.7 per cent) and food retailing (0.3 per cent). Sales fell in household goods retailing (-1 per cent).
"To get closer to a full recovery, retailers need the momentum of at least a few months of trade growth and this won't happen while the RBA continues to take money away from consumers with interest rate rises," said Cromarty.
The Australian National Retailers Association (ANRA) described the figures as extremely disappointing and urged the RBA to press the pause button on further interest rate rises until the sector showed stronger signs of recovery.
ANRA chief executive Margy Osmond said that is was a weak and stunted result for retailers who have been suffering from an up and down and very challenging sales environment that continues to create a great deal of uncertainty.
“This result is particularly concerning following the Reserve Bank’s decision early this week to increase interest rates for the sixth time in eight months. The latest interest rate hike has the potential to further curb growth and damage consumer confidence with the impacts of an already soft winter shopping period.
“We would like to see three consecutive months of robust growth for the retail sector at around 0.75 per cent before further interest rates rise are considered.”
Osmond warned that 2010 was going to be a tough year for retailers with the prospect of further interest rates rises and more demanding and sales orientated consumers focused on bargain shopping.