Retailers in Australia – particularly one key industry body – are frustrated with the Reserve Bank of Australia’s decision to keep the cash rate at 2.75 per cent for another month – the second in a row that it has been held steady.
According to the Australian Retailers Association (ARA), a more appropriate cash rate might be closer to 2.5 per cent. ARA executive director Russell Zimmerman suggested that this could be the push consumers need to get back out into the retail landscape, where they have been returning cautiously in the wake of the global financial crisis.
The cash rate was reduced to 2.75 per cent in May and has been held steady in June and July.
“This frustrating rate stay, together with higher operational costs and recent increases to the minimum wage, superannuation levy and penalty rates, means we can only expect further damage to retailers who are struggling to keep their heads above water,” said Mr Zimmerman.
He added: “While the ARA appreciate that the RBA lowered rates in May, this small cut is simply not enough to help retailers who need relief from consumers’ reluctance to spend.”
Australia’s retail sector is collectively worth approximately $258 billion and employs an estimated 1.2 million people, according to ARA figures.
Mr Zimmerman pointed out that cuts to the cash rate are just one strategy to help retailers in Australia stay in the game.
For example, taxes, wage reform and tenancy issues are all key areas that can affect retail performance – and a stable government that recognises the economic value of retail will be able to introduce and implement measures that support the industry, he said.