Cash rate drop welcome relief for retailers - ARA

THE Reserve Bank of Australia’s decision to lower the cash rate by 25 basis points to 1.5 percent this afternoon is expected to provide retailers with a much needed boost to sales, according to the Australian Retailers Association (ARA).

ARA Executive Director, Russell Zimmerman, said that while it may take a few weeks for consumers to adjust their levels of spending, he is hopeful that the downward movement of interest rates to its lowest ever will help to halt the slides in retail sales growth of the past few months.

“Retail spending growth has fallen since the beginning of 2016, with some states, such as Queensland and Western Australia suffering with almost stagnant growth,” said Mr Zimmerman.

“This reduction of interest rates will allow consumers greater access to discretionary cash, which we anticipate will result in Australians returning to stores. It’s been a difficult few months for many Australian retailers, particularly those in food retailing and household goods.

“It’s also crucial that we begin to see some upwards pressure on inflation, with the latest Consumer Price Index (CPI) announced last week indicating growth of just one percent across the board, but much less for most retail categories.”

The recent election and unseasonably warm weather has also taken its toll on retail in the past quarter.

“With the Election now wrapped up, we’ve seen some consumer confidence return, and combined with this new drop in interest rates, we’ll be watching for a recovery as the Christmas period – retail’s most crucial period – grows closer,” Mr Zimmerman said. 

About the Australian Retailers Association:

Founded in 1903, the Australian Retailers Association (ARA) is the retail industry’s peak representative body representing Australia’s $293 billion sector, which employs more than 1.2 million people. The ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 5,000 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

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