The one per cent decrease in retail turnover for July reflected the sensitive nature of consumers in the current economic climate and quashed any case for interest rate hikes in the lead-up to Christmas.
Australian Retailers Association (ARA) executive director Russell Zimmerman said July retail trade decreased in all states (NSW -1.2 per cent, VIC -0.7 per cent, QLD -1.4 per cent, SA -1.4 per cent, WA -0.9 per cent, TAS -0.7 per cent, ACT -0.2 per cent) except the Northern Territory (+2 per cent) and showed recent hikes in consumer sentiment weren’t necessarily translating into retail sales.
"There is a lot of good news in the economy at the moment – Australia has avoided recession; GDP rose by 0.6 per cent in the June quarter; and consumer sentiment continues to soar with the September Westpac Index released today reaching the highest level since July 2007 at 119.3,” said Zimmerman.
"On the other hand retail sales have decreased over the past couple of month and the RBA must carefully consider the current sensitive nature being displayed by consumers who will respond to rumoured interest rate increases by further tightening their purse strings.
"Anything that takes cash away from consumers at the moment, including premature interest rate hikes, will be damaging to retail sales in the lead up to Christmas.
"Retailers are still hopeful for a strong Christmas this year and they don’t need another blow while they are trying to recover from over 12 months of reduced trade.
While retail trade has been showing steady growth for most of the year, this has been underpinned by a number of economic stimuli including government cash handouts, low interest rates and tax cuts which all take between three to six months to reach their full impact on retail sales.
"Of course, for consumers to re-enter the retail market without trepidation they must have job security and retailers will be looking carefully at August labour force figures due to be released tomorrow.
July turnover decreased in household goods retailing (- 3.6 per cent), clothing, footwear and personal accessory retailing (-0.6 per cent) and food retailing (-1.9 per cent). During the same period retail sectors that have been implementing some clever marketing initiatives, including department stores (+2.5 per cent), other retailing (+0.8 per cent) and cafes, restaurants and takeaway food services (+1.0 per cent), have increased turnover.