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Peak retail industry body the Australian Retailers Association (ARA) said retailers will feel the brunt of the fourth 25 point interest rate rise since October last year taking the cash rate to four percent after an unhealthy post-Christmas sales season.

ARA Executive Director Russell Zimmerman said retailers felt let down by the Reserve Bank of Australia’s (RBA) decision to take cash away from Australian home owners after a slow post-Christmas sales period and just after what is traditionally the toughest month for consumers and retailers alike.

“February is always a hard time for families dealing with back to school costs as well as credit card bills from Christmas and an interest rate rise immediately after this time will now further add to this pressure,” Zimmerman said.

“Last month the RBA showed a wise and patient strategy by keeping interest rates on hold but now it seems this approach has been replaced with a hasty decision and one that is out-of-touch with normal family financial cycles.

“January retail sales released today showed only slow growth at 1.2 percent, which is well below average growth rates for the post-Christmas sales period. In fact, when compared to January 2008, this year there was only a three percent growth in retail sales. This is not something for retailers to celebrate considering year-on-year growth from January 2007 to January 2008 was about 6.3 percent.

“Over 63 percent of recently surveyed retailers said the Christmas and post-Christmas sales seasons they’ve just experienced were worse than the previous year, indicating a pull back from consumers after successive interest rate rises at the end of 2009.

“After only a fair Christmas and what appears to be a soft post-Christmas sales period, retailers are now entering their toughest month of the year with yet another blow to consumers’ pockets.

“Retailers also have wage bill pressures from the Modern Retail Award changes from 1 July and the Minimum Wage setting decision is expected to further add to this pressure. Retailers are warning the RBA to take a cautionary approach to future interest rate decisions that have a direct and real impact on retailers who are trying to hold onto staff.

“Retailers are one of Australia’s largest employers, and with so many upcoming wage bill pressures, they must have incentive to hold onto staff. Taking cash away from consumers after a year of patchy retail sales and a restrained holiday sales period doesn’t encourage employment in the sector,” Zimmerman said.

For over 105 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia’s $292 billion retail sector which employs over 1.5 million people. As an incorporated employer body under the Workplace Relations Act and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia.

Source: http://www.retail.org.au/index.php/news/RBA_rate_rise_after_%E2%80%98unhealthy%E2%80%99_post-Christmas_sales_-_ARA_says_retailers_feel_%E2%80%98let_down%E2%80%99_by_RBA_decision_