Retailers have urged the Reserve Bank of Australia to show restraint at its next monetary policy board meeting on August 6, following a positive June retail trade result.
The Australian Bureau of Statistics (ABS) revealed that June retail trade rose by 0.5 per cent from May and by 2.9 per cent year on year, mostly driven by extensive end-of-financial-year bargains.
The National Retail Association (NRA) interim CEO Lindsay Carroll said that the boost in June is bittersweet as retail business owners will now be anxiously awaiting the RBA’s decision next week.
“The ABS reported that the Consumer Price Index grew to 3.8 per cent in the June quarter, and while housing prices seem to be the biggest contributor, the Reserve Bank’s one-size-fits-all solution will inevitably only punish retailers and consumers,” Carroll said.
“If the Reserve Bank decides to raise interest rates at its next meeting, it would at a minimum sabotage Black Friday sales in November and, at worst, potentially trigger a sector-wide recession in retail.
“Retailers depend on the holiday trading period to sustain them through the following year’s quieter months, like January and February. With retail trade insolvency appointments increased by 42.2 per cent to 768, as revealed by ASIC, they need those sales more than ever.”
According to the ABS, June’s positive trade result month-on-month was driven by discretionary spending, such as for household goods retailing (up 1.1 per cent), department stores (up 1.0 per cent), and personal accessory retailing (up 0.7 per cent).
“We are in a cost-of-living crisis, which has caused a cost-of-trading crisis, so bargains are the only opportunity for Australians to spend on household goods and clothing,” Carroll said.
“We urge the Reserve Bank to allow retailers to keep more of what they earn. Increasing interest rates in August would be detrimental to Australian businesses and blunt retail’s biggest trading season.
“Policymakers should shift their attention to the true contributors to inflation, such as housing. Retail businesses are a critical part of our nation’s economy and more should be done to support the sector.”