The Australian Retailers Association (ARA) has called on the RBA to reduce interest rates in February after the Consumer Price Index (CPI) dropped from 3.5 per cent down to 3.1 per cent.
ARA executive director Russell Zimmerman said the lower annual CPI confirms the current weak consumer sentiment continues to exist.
“The RBA has to take into account CPI when making a decision to cut interest rates, however the low inflation rate means there’s no reason for the RBA not to cut rates,” he said
“The latest ABS figures released in early January showed no growth where retailers were expecting a boost due to an interest rate cut and early Christmas shoppers. However, retail has remained flat and that is an indication of weak consumer confidence and the need for relief.”
While a lowering of interest rates is the outcome retailers need, ARA has also warned the government cannot place any more burden on consumers or business through additional taxes or charges.
“It’s clear retailers are bearing the burden of decreased spending in uncertain economic times. ARA is looking to governments not to increase the cost of living through additional taxes and charges as federal and state budget considerations commence in the New Year,” Zimmerman said.
“With December trade figures to be released in February, retailers are hopeful of some Christmas spending cheer given most people leave their Christmas shopping to the last minute. But ARA expectations for growth over the holiday season are soft with only a 2.2 per cent growth predicted compared to Christmas 2010.”