Australia's peak retail body, the Australian Retailers Association (ARA), has welcomed the Reserve Bank of Australia's (RBA) decision today to hold cash rates at 4.35% in its final monetary decision before Christmas.
While last month's Melbourne Cup Day increase came as a blow for Australians and retailers, the decision to pause the cash rate today provides some relief for consumer and business confidence.
ARA CEO Paul Zahra said December's rate decision will give the industry "cautious optimism" heading into the final few trading weeks before Christmas and the highly important Boxing Day and post-Christmas period.
"We're pleased to see the RBA provide some much-needed reprieve for consumers and businesses during the busiest trading season of the year," Mr Zahra said.
"Today's decision will see the cash rate paused for at least two months, which will certainly help bolster business and consumer confidence in the vital Christmas and Boxing Day trading weeks to come.
"At a time of immense financial pressure and hardship for most- avoiding another cash rate increase will have a positive impact on spending and retail preparations.
"Avoiding a bitter rate increase blow before Christmas will certainly come as a relief to Australian homeowners, consumers, businesses, and the retail industry.
"Most discretionary retailers make up to two thirds of their profits at this time of year, and a second consecutive increase would have had a further negative impact on the rest of the year for retailers who are already battling a spending slowdown.
While Black Friday proved to be successful for retailers across the country, Mr Zahra said it was most likely because of shoppers bringing forward their Christmas gifting to take advantage of the sales.
"While this year's Black Friday was record-breaking, it may come at the expense of December trading - which we're expecting to be more subdued," Mr Zahra said.
"The industry can be confident knowing they're safeguarded from potential cash rate increases throughout the rest of the holiday trading period," Mr Zahra added.
"Continued interest rate hikes have the dual effect of reducing customer spending whilst also increasing business costs - during a time where the industry is already under enormous pressure.
With December's cash rate decision now in the books, the RBA will not meet again until February - with just eight meetings in 2024.
