A rate cut is now more crucial than ever for retailers with the ABS retail trade figures showing that Australian retail turnover was flat in October, seasonally adjusted following a 0.5 per cent rise last month.

ARA executive director Russell Zimmerman said the RBA’s decision to cut interest rates in October wasn’t passed on swiftly enough by the banks, and the rate hold in November was unsustainable for consumers as they suppressed their spending.

“It’s clear from the figures that there needs to be an interest rate cut tomorrow in order to stimulate consumers and ensure any available cash is put into their pockets in the lead up to Christmas,” he said.

“From the ABS October figures, the ARA has calculated 3.1 percent growth compared to October last year, which is further evidence that retail growth has come to a grinding halt, with consumers reigning in their spending as household budgets are pressured by increased costs associated with utilities and the carbon tax introduction.

“A rate cut tomorrow might be just what consumers need to be able to get out there and start their Christmas shopping. In fact, retailers are now relying on any consumer relief in order to save the silly season.

The only industry to rise this month was food retailing (0.9 per cent). This was offset by falls in household goods retailing (-1.6 per cent), other retailing (-0.5 per cent), cafes, restaurants and takeaway food services (-0.3 per cent), department stores (-0.1 per cent) and clothing, footwear and personal accessory retailing (-0.1 per cent). Over the longer term, food retailing remains the strongest performing industry (up 0.5 per cent in trend terms).

NRA chief executive Trevor Evans said the ABS figures showed all discretionary spending areas continued to decline, with only food retailing recording a slight increase.

“This continues the trend we have seen over several months where shoppers are spending only on essentials,” he said..

“Spending on discretionary items such as footwear, clothing and department store goods has fallen again during the month – and that was from a low base after several months of declines.

“Retailers are now in the midst of what should be their busiest trading season.  However, all the reports we are receiving from our members are that spending patterns have not shifted.

“This is the time of year when retailers normally accumulate the sales volumes that see them through the leaner times, and help them sustain employment levels throughout the year.

“If this trend is not reversed, it will lead inevitably to job losses in the sector.  We call on the RBA to cut rates tomorrow, and give retailers and their staff a chance of a merry Christmas and a bright new year.”

Retailers however welcomed figures showing Queensland, New South Wales and Western Australia had recorded growth for the month.