Retailers say they are concerned the Reserve Bank of Australia's (RBA) decision today to hold the cash rate at 3.6 per cent will suppress spending during the most important retail sales period of the year.
The Australian Retailers Association (ARA) and National Retail Association (NRA) said a pre-Christmas rate cut would bolster consumer confidence and encourage much-needed discretionary spending across the peak season sales period.
"A rate cut today would have given a great boost for retailers across the nation in the lead up to peak season. While spending has started to lift, we are not yet at the level where retailers feel assured of a clear shift in the cycle," said ARA CEO Chris Rodwell. "Many discretionary retailers make up to two thirds of their profits during peak season and use this important period to replenish cash reserves.
"The past couple of years have been challenging, particularly for small business, which have only experienced better trading conditions in recent months. Every cash rate reduction buoys the retail sector and consumer confidence and that's why retailers are holding out for further interest rate reductions.
"Retailers are also facing continued cost pressures from spiking rents, wage growth, higher energy, insurance, and supply chain challenges - alongside an intensifying wave of retail crime.
"Global competition is significant, with ultra-low-cost digital retailers capturing a sizeable share of local spending without the same obligations as domestic businesses. On top of this, continued regulatory reform and workplace changes are stretching small businesses beyond their capacity."
"That's why we we're advocating for action around retail crime and a bold agenda on productivity and red-tape reduction. Removing barriers will strengthen local retailers, who contribute nearly one fifth of Australia's GDP, and give them the confidence to invest in their businesses.
"With one-in-ten Australians employed in retail, our $430 billion sector is crucial to the national economy. A stronger economic trajectory can't happen without a retail recovery. To encourage sector recovery, we're keen to see a rate cut this side of Christmas," he said.
