The 0.9 per cent increase in retail trade turnover was another sign of slow and sporadic retail recovery, which should discourage any premature increase in interest rates when the Reserve Bank meets next Tuesday.

August retail trade increased in all states (NSW 0.8 per cent, VIC 0.6 per cent, QLD 1.4 per cent, SA 1.1 per cent, WA 0.4 per cent, TAS 1.4 per cent, ACT 0.7 per cent) except the Northern Territory (-0.7 per cent) and was a positive sign for retailers who are preparing for a stronger Christmas trading period.
Australian Retailers Association (ARA) executive director Russell Zimmerman said after the previous two months of decreases in turnover, the increase in turnover was encouraging.
“This year has been quite a roller coaster ride for retailers,” he said. “They’ve had increased monthly trade in January, March, April, May and now August but decreases in February, June and July.
“This inconsistency in retail recovery is a clear sign consumers are still not spending confidently and they are definitely not ready for any interest rate hikes.
“Changes to interest rates should instead be linked more closely to unemployment figures because for consumers to re-enter the market they need job security,” he said.
Retailers are preparing for a stronger Christmas but any interest rate rise in the lead up to the festive season could be enough to frighten sensitive consumers back into financial hibernation, according to Zimmerman.
“Retailers are urging the RBA to carefully consider that anything taking cash away from consumers at the moment, including premature interest rate hikes, will be damaging to retail recovery and will stop funds flowing through the rest of the economy.”
July turnover increased in household goods retailing (0.9 per cent), food retailing (1.8 per cent) department stores (2.4 per cent), and cafes, restaurants and takeaway food services (1.9 per cent).
“Other retailing decreased (-3.0 per cent) and clothing, footwear and personal accessory retailing had no percentage change. However, retailers in this sector will be expecting a boost in the coming months as spring racing fever spreads,” said Zimmerman.