The Reserve Bank of Australia's (RBA) decision to cut the cash rate by 25 basis points to 3.85 per cent was welcomed by the retail industry today, as an encouraging boost for Australia's retail recovery.
The Australian Retailers Association (ARA) and National Retail Association (NRA) said although the interest rate cuts are occurring later than hoped, the relief for Australian households should have a positive impact on trading conditions in the coming months.
"While today's decision has been on the cards, we hope it nudges business and consumer confidence in the right direction," said ARA CEO, Chris Rodwell. "A lower cash rate should have a positive flow-on effect to retail businesses, many of which are highly dependent on discretionary spending. That's why we urge the RBA to stay vigilant to opportunities to provide further relief.
"Retailers - particularly small businesses – are the backbone of the Australian economy and play a vital role in job creation and supporting local communities. Retail contributes $430 billion to our economy and employs one in ten Australians - a retail recovery is critical to our economic wellbeing," he said.
Mr Rodwell said many retailers have been under enormous pressure for the past five years, battling the dual headwinds of higher business costs and lower spending.
"Interest rates are one part of the equation. We now need to see some policy changes that will give retail the license to grow. The biggest ticket item is improving productivity by cutting red-tape and applying downward pressure to business costs like energy, leasing, insurance and compliance. We're also keen to collaborate with government on solutions for retail crime and supply chain resilience," he said.
"The volatility resulting from the current trade wars and ultra low-cost global competitors is also impacting Australian retail's share of wallet. While this is a very resilient sector, retailers can't do it alone and we need the Federal Government to lean in to support the recovery of this vital sector."
The peak bodies acknowledged that while the rate cut will boost retail and consumer sentiment in the short term, there is still much headway to make, noting there is a lag from when the decision is taken till when the tills of retailers tick up.
"While this is a boost, alongside the more positive March trade figures from the ABS, we need to see much greater relief before we are close to a recovery.
"We're keen to see continued rate cuts by the RBA to help ignite the economic recovery Australians are waiting for," said Mr Rodwell.
